1. Pillage Mining is considering which mutually exclusive projects it should undertake, as it has only £600 million to spend. The firm is presented with three different alternatives, each of which requires an initial investment as shown below. 
2. 
   
3. The company anticipates a cost of capital of 12%, and the net after tax cash flows of the projects are as follows (£mm): (you can use excel, but show calculations)                                                                                                         
4. 
   
   1. Calculate the NPV and payback period of each project. Show all workings. 

Year	Project X	Project Y	Project Z
0	(200)	(160)	(155)
1	25	90	50
2	75	45	40
3	65	35	45
4	70	35	45
5	65	25	35

 

1. Recommend, with reasons, which projects you would undertake, if any. Show all workings. 

Which project has the highest IRR and why? Show all workings.