Question 3 You are the finance manager of Wide WLL based in Doha. You are evaluating two capital investment projects in

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Question 3
You are the finance manager of Wide WLL based in Doha. You are
evaluating two capital investment projects in the UK which may
assist the company in achieving its business objectives. Both
projects will require an initial investment of £500,000 in plant
and machinery. The expected cash flows of the two projects are as
follows:
Year Humber Project Avon Project
£ £
1 60,000 220,000
2 90,000 220,000
3 140,000 50,000
4 210,000 50,000
5 300,000 50,000
6 140,000 50,000
7 100,000 200,000
The cost of capital of Wide WLL is 10%.
Required:
a. For both projects calculate the NPV and the IRR (20
marks)
b. If both projects are mutually exclusive, advise Wide WLL
which project should be undertaken (5 marks)