Prepare an investment plan, Financial Accounting

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Question:

Mada Air Ltd is thinking of diversifying its activities in order to cope with the financial crisis. After careful evaluation its research and development team has proposed the following projects:

Projects                  Investments Required (€)               NPV at 15%
Hotel                                    20 000 €                                 8000
Eco Tourism                          40 000 €                               28 000
Sea Cruise                            35 000 €                               37 500
Health Tourism                     50 000 €                                31 500
Catering                               15 000 €                                3500

The Eco Tourism and Health Tourism projects are mutually exclusive.

Required:

If the cost of capital is 15% and only €100,000 is available prepare an investment plan for Mada Air Ltd. Assume that all the projects are divisible.


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