MAASAI MARA UNIVERSITY
SCHOOL BASED EXAMINATIONS
2015/2016 ACADEMIC YEAR
FOURTH YEAR FIRST SEMESTER
SCHOOL OF BUSINESS AND ECONOMICS
BACHELOR OF EDUCATION
COURSE CODE: IRD 400
COURSE TITLE: PROJECT DEVELOPMENT AND APPRAISAL.
DATE: MAY 2016 TIME:
INSTRUCTIONS TO CANDIDATES
3. Answer Question ONE and any other THREE questions.
This paper consists of TWO printed pages. Please turn over.
Question One. (25 Mark)
(a) Discuss the meaning and scope of project appraissal. (5 marks)
(b) Firm A is levered and finances its assets by both equity and debt.it has a net operating income of kshs 2000 and interest payments of 30%. The firm’s equity capitalization rate is 9.33% and the cost of debt is 6%.find the value of the firm and the WACC. (8 marks)
(c) Explain the methods of project appraissal in detail. (6 marks)
(d) What does leverage mean in project development. Discuss its three forms. (6 marks)
Question Two.
(a) You have been hired as a consultant to advice on economic feasibility of a project. Discuss the various methods that can be used and the acceptance criteria. (10 marks)
(b) Whad does feasibility analysis mean? Illustrate its considerations.
(5 marks)
Question Three.
(a) Describe the project development process in detail. (10 marks)
(b) Inflation affects project implementation process. Discuss this concept highlighting the its causes. (5 marks)
Question Four.
(a) Explain the principles of project development in detail.
(10 marks)
(b) Project environment impacts the project implementation cycle. Discuss. (5 marks)
Question Five.
(a) A firm has an NOI of kshs 100,000 and an investment of kshs 500,000 in assets. Using Net Income Approach compute the total value of firm and WACC if the firm has (i) no debt (ii) 100,000 debt and (iii) 300,000 debt. (10 marks)
(b) explain the legal considerations in project implementation.
(5 marks)
