show whether SON stock is fairly valued, undervalued, or overvalued. [2 marks] QUESTION FIVE Total [15 marks] After paying GH 30,000 for an initial investigation on projects assessments, the finance department of Finger Foods Plc provided the following end-of-year cash flows for the investment projects. Project T T2 T3 T4 Abo (A) Baa (B) Cal (C) Dok (D) Eak (E) Initial To Outlay 000 (1,500) (2,000) (1,750 (2,500) (1,600) 000 (500) (1,000) 500 700 (500) 000 1,200 2,500 1,100 900 200 000 600 2,500 1,400 1,300 2,800 000 300 2,500 1,000 300 2,300 As ancial Analyst for the firm, your managing director has written a memorandum to you with the cash flows from the various projects, as shown above, to appraise the projects and advise management on the best decision the company can take to maximize the company's value. The company's cost of capital is 15% and its corporation tax is 30%. Required: a) Advise Finger Foods Plc management in the following circumstances. Page 3 of 4 i) Using the NPV approach advise the managing director which projects should be accepted [5 marks] ii) If the amount of cash available for the investments is limited to GH 3 million, and all projects are divisible and independent. Which projects should be accepted? [3 marks] iii) If the amount of cash available for the investments is limited to GH 3.5 million, and all the projects are independent and indivisible. Which projects should be accepted? [3 marks] iv) If the projects are mutually exclusive projects which one should be accepted? [1mark] b) Discuss the reasons why capital rationing may arise [3 mark] Total [15 marks) END OF PAPER