MAASAI MARA UNIVERSITY
REGULAR UNIVERSITY EXAMINATIONS
2016/2017 ACADEMIC YEAR
FOURTH YEAR SECOND SEMESTER
SCHOOL OF BUSINESS & ECONOMICS
BACHELOR OF ARTS IN ECONOMICS
COURSE CODE: ECO 422
COURSE TITLE: PROJECT APPRAISAL AND EVALUATION
DATE: 16TH MAY, 2017 TIME: 8.30 – 10.30AM
INSTRUCTIONS TO CANDIDATES
1. Answer Question One and any other three.
2. DO NOT WRITE ANYTHING ON THE QUESTION PAPER.
This paper consists of 2 printed pages. Please turn over
Question One (Compulsory)
(a) Using relevant examples, distinguish between projects and programmes. (15 marks)
(b) Your firm is trying to decide whether or not to invest in a new project opportunity based on the following information. The initial cash outlay will total KSh 25,000,000 over two years. The firm expects to invest KSh 20,000,000 immediately and the final KSh 5,000,000 in one year’s time. The company predicts that the project will generate a stream of earnings of KSh 5,000,000, KSh 10,000,000, KSh 20,000,000, and Ksh 7,500,000 per year, respectively, starting in Year 2. The required rate of return is 12%, and the expected rate of inflation over the life of the project is forecast to remain steady at 3%. Should your firm invest in this project? (10 marks)
Question Two
Mrs Mary Kutit has been appointed as the Director in the Planning Department of one of the Counties in Kenya. Her first assignment is to develop a criteria that will allow the Department to effectively screen project alternatives. Explain the issues that you would advise her to include in the criteria. (15 marks)
Question Three
Various international financial institutions like the World Bank, African Development Bank and Asian Development Bank frequently use Social Cost Benefit Analysis technique for project appraisal. Discuss the strengths and weaknesses of the technique. (15 marks)
Question Four
Using relevant examples, discuss the benefits of using milestones as a form of project control. (15 marks)
Question Five
Using relevant examples, differentiate between project monitoring and evaluation. (15 marks)
