Question $2$

Jo Saka Co$.,$ a vibrant start$-$up construction company in Zambezia, has now diversified

its business using the on$-$balance sheet funding modality. Its major equity partner, Jo

Mbuzi, has invested ZK$100,000$ which can be invested across five portfolio within its

business mandate. Table $1$ below provides a table of all active portfolio to be invested

in$.$

Table $1$: Jo Saka Co$.$ on$-$balance sheet portfolio

Jo Saka Co$.$ limits total investment in any single project to a maximum of ZK$75,000$

and has decided not to borrow additional funds. For any funds uninvested, Jo Saka

Co$.$ can earn eight percent per annum for investing in Zambezia government bonds

that are open for investment. Returns from investments can be immediately

reinvested. For instance, the positive cash flow received from project WT at time $2$

can immediately be reinvested in project GE$.$ Table $2$ provides an outlay of net

cashflows associated with an investment of ZK$1$ in each project.

Table $2$: Outlay of net cashflows by Investment

Time $1=$ Present, Time $2=$Yr$.1,$ Time $3=$ Yr$.2,$ and Time $4=$ Yr$.3($Yr$.=$ Year$)$

For instance, ZK$1$ invested in investment GE requires a $1$ cash outflow in Yr$.1$ and

returns ZK$0\mathrm{.}50$ Yr$.2$ and ZK$1$ in Yr$.3.$

Formulate the investment plan that will maximize cash on hand in Yr$.3.$