Project Financing
Project Financing
Project Financing
INSTRUCTIONS:
Answer question ONE (compulsory) and any other TWO questions
QUESTION ONE
(a) What is a project? Distinguish between a project and a programme. (5 marks)
(b) Why does money have time value? (3 marks)
(c) Evaluate the various techniques of appraising projects. (10 marks)
(d) What are the merits and demerits of NPV technique in capital budgeting? (5 marks)
(e) Discuss the importance of project appraisal in project management (7 marks)
QUESTION TWO
(a) Given the following information about a project calculate the NPV, BC RATIO and the
IRR. (15marks)
QUESTION THREE
(a) Write short brief notes on the following: (10marks)
i. Pay-back period
ii. NPV Techniques
iii. IRR Techniques
iv. Sustainability
v. Participation
(b) Why is monitoring and evaluation an important aspect of development projects?
(10marks)
QUESTION FOUR
(a) What are the merits and demerits of NPV techniques in Capital Budgeting (6 marks)
(b) Consider the following after-tax cash flows of two mutually exclusive projects for the
Kenya Youth Funds Trust.
Year Discounting
0 1.000
1 0.909
2 0.826
3 0.751
4 0.683
Required: To compute the NPV of the two projects X and Y and suggest which of the two
projects should be accepted. (14marks)
QUESTION FIVE
You are manager of a five year water project that is coming to an end in one month’s time. You
are required by the funding agency to provide an end of project report upon which important
decision and actions will be made. What information would you include in the report?
(20marks)