Determine the optimal investment sets

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Management is faced with eight projects to invest in. The capital expenditures during the year has been rationed to Sh 500,000 and the projects have equal risk and therefore should be discounted at the firm's cost of capital of 10%.

Project Cost Project Cashflow NPV at the

t = 0(Shs) Life per year 10% cost

1 400,000 20 58,600 98,895
2 250,000 10 55,000 87,951
3 100,000 8 24,000 28,038
4 75,000 15 12,000 16,273
5 75,000 6 18,000 3,395
6 50,000 5 14,000 3,071
7 250,000 10 41,000 1,927
8 250,000 3 99,000 (3,802)

Required:

Determine the optimal investment sets.

Reference no: EM131114387

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