Question 1 An organization is considering two (2) projects with the expected cashflows for each as follows: Year A B Discount Factor 0 (500,000) (500,000) Y1 0.7692 1 250,000 50,000 Y2 0.5917 2 250,000 50,000 Y3 0.4552 3 50,000 250,000 Y4 0.3501 4 50,000 150,00 Y5 0.2693 5 50,000 150,000 Assuming the cost of capital is 30% and with the discounted factors above: a) Calculate the NPV of each project b) Discuss in detail why one project is better than the other c) In what situation of the project finance do we consider to be at the breakeven point? [25 Marks] Question 2 Ghana is a developing nation and infrastructure development has been a topic for discussion by successive governments. It has been said that the annual infrastructure-funding gap is estimated at US$2.0 billion for the next decade and government and private sector participants are supposed to collaborate to help bridge this gap. This has increased the reliance on a project financing approach for the development of both privately funded infrastructure and public-private partnerships (PPPs). a) As a project finance expert, what are the benefits of developing the country's infrastructure and why is it necessary for subsequent governments to pay any attention to this issue? b) Explain three (3) advantages of using project finance for infrastructure development instead of corporate financing. c) Explain why is it necessary to conduct feasibility studies before a project is embarked on? Question 3 [25 Marks] a) Who are the main parties to project financing and briefly describe their roles and responsibilities? b) Explain briefly, what is meant by a take-or-pay contract and how is it important to project financing processes? c) What are the four categories of input factors in project finance model structure and how do they impact the processes of financing [25 Marks] Question 4 You have been asked to conduct a Feasibility study to help understand all relevant factors that must be taken into account during the project implementation. Discuss the five (5) principal areas you will like to consider during the exercise.