Question: QUESTION THREE You have been retained as a management consultant by Syokimau Developers, to analyze two proposed capital investment projects, projects A and B. Each

QUESTION THREE You have been retained as a

QUESTION THREE You have been retained as a management consultant by Syokimau Developers, to analyze two proposed capital investment projects, projects A and B. Each project has a cost of Sh. 10 Million, and the cost of capital for both projects is estimated at 14%. The projects expected net cash flows are as follows: Expected Net Cash Flow (Figures in Thousands) Year 0 olm Project A (Ksh 10.000) 6,500 3,000 3,000 1,000 Project B (Ksh. 10,000 3.500 3.500 9.500 3.500 Required: (a) Calculate each project's nel present value (NPV) (10 Marks (b) Calculate each project's profitability index (PI) 6 Marks fc) Should both projects be accepted if they are mutually exclusive

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