Neco Model Questions Vol1 2022 Government Question 27
Practice objective / multiple choice question 27 from the 2022 Neco Model Questions Vol1 Government examination.
A government department is considering three projects (A, B, C). The data are:\n\n- Project A: initial cost ₦80 million; annual operating cost ₦5 million; annual benefit ₦30 million for 5 years.\n- Project B: initial cost ₦120 million; annual operating cost ₦5 million; annual benefit ₦60 million for 5 years.\n- Project C: initial cost ₦70 million; annual operating cost ₦4 million; annual benefit ₦25 million for 5 years.\n\nThe discount rate is 10\% per annum. The department may spend at most ₦200 million on initial costs and must include at least one project whose benefit‑cost ratio exceeds 1.5. Which combination of projects should be selected to maximise the net present value (NPV) of the portfolio?
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This is Neco Model Questions Vol1 2022 Government Question 27. It is one of the objective questions from the 2022 Neco Model Questions Vol1 Government examination.
Difficulty level: Hard .
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