2 Project Initiation

2.1 Business Needs

1. All projects are responses to business needs identified by clients.
2. Consider a scenario where an organization notices that the producers of soya milk sell their product in
simple unlabeled polythene bags. Furthermore, a survey of the market reveals that the demand for soya
milk will rise in the coming years due to proliferation of illnesses in dairy animals rendering cow milk
disease-prone.
3. Several business needs could be identified from this scenario including:
• Soya milk products
• Soya beans growing
• Soya milk distribution
• Other soya products making
• Non-soya milk products distribution
4. From the above business needs, the following projects could be conceived:
(i) research to investigate the profitability of any or all of the identified business needs.
(ii) to build the facility to provide soya milk or any of its derivatives.
(iii) to build a factory to produce soya products packaging, e.g. boxes, etc.
5. These are possible projects with a definite start and end dates, a clear purpose and constraints such as
time and budget within which they will be carried out.
6. This is all in the eyes of the client.
2.2 Feasibility Study
1. Carrying out a feasibility study is important to confirm whether the project should actually be
undertaken or not.
2. It all starts in the client’s organization where an individual is normally appointed to start and manage
this process.
3. This could start with a project charter which would outline the purpose of the project and what it is to
achieve.
4. The feasibility study would outline the who is responsible, the project brief to be analyzed, who should
be involved, levels of detail, budget for the feasibility study, and report back date.
5. The project manager and his team (for the feasibility study) will plan, carry out stakeholder analysis,
compare with the client’s needs and constraints and come up with options or alternative solutions to
submit to the organization.
2.2.1 Feasibility Study Plan
1. This document outlines the various activities required to be carried out and the roles and assignments
of the team members.
2. This could be carried out as a mini-project.
2.2.2 Stakeholder Analysis
1. Analysis of the stakeholders is important as it helps to determine the needs and expectations of
everyone concerned.
2. The stakeholders include people and organizations who are actively involved or whose interests may be
affected by the project being implemented.
3. The work of the project manager is to identify the stakeholder’s needs and expectations and then
manage them or have them balanced to ensure project success.
4. This is done by creating an environment where the stakeholders are encouraged to contribute their skills
and knowledge as this may influence the success of the project.
5. The following could be examples of stakeholders:
• Originator
• Owner
• Sponsor
• Project Champion
 • Users
• Customers
• Project Team
• Senior Management
• Functional managers
• Supplier or Vendor
• Sub-contractors
• Regulatory Authorities
• Trade Unions
• Special Interest Groups
• Lobby Groups
• Government Agencies and Media Outlets
• Individual Citizens
6. Stakeholders may generally be classified into those positively affected and those negatively affected by
the project being implemented.
7. Practice has established that it is better to start with those who will be negatively affected and then
move on to those who will be positively affected.
8. In the same way, we could identify the key decision makers and focus on their needs and balance these
with the interests of the clients.
2.2.3 Define the Client’s Needs
1. The starting point for a project is usually to address a problem or a need or a business opportunity that
has been seen.
2. This will lead to the organization setting up a project structure.
3. Once a project team has been set up, these will begin to determine the client’s needs to come up with
a solution to the problem.
4. This obviously means consulting the relevant stakeholders, particularly the client such that his/her
objectives are met.
5. The client’s needs could take the form outlined in Section 2.1.
6. There will also be need to carry out a project viability check to find out other logistical needs and support
that will help ensure the project can be carried out.
7. These could be done by a contractor or other specialists.
8. Some of the issues to be looked at could include:
• Consideration of the effect of location on the project. For example can transport requirements
be met using existing roads and ports during the execution and operation of a project such large
infrastructure undertakings that require wider roads for abnormal loads.
• Consideration of how the environment will affect the product, e.g. a hotel in Zambia requires a
robust air-conditioning system
• Consideration of how the product will affect the environment e.g. will it deplete the ozone layer
• Are the aesthetic and style commensurate with current fashions? E.g. modern office blocks and
museums need to be stylish on the outside to attract people inside.
• Define the target market in terms of who will buy the product
• Assess the market supply and demand curve in terms of what is the demand for the product now
and forecast demand for the future
• Assess competition from other players in the market.
2.2.4 Evaluate Constraints
1. As a project manager, it is always important to realize, during feasibility study and thereafter, that
projects are laden with certain limitations classified into internal project constraints, internal corporate
constraints, and external constraints.
2. Internal project constraints relate directly to the scope of the project and include:
 • Possibility of the product being made i.e. can the product be made? Can the company meet the
specifications?
• Availability of technology. Does the company have the required technology to make the product?
Do they need to import or transfer technology? Should the company wait for better technology?
• Level of expertise of resources. Do personnel have the ability to or do they need to be trained?
• Are there any special design, training, or machinery requirements?
• Required level of quality. What is the required quality level for the product or service? Is it the
ISO9000 series and can it be met?
3. Internal corporate constraints relate to company policy and strategy which may impose limitations on
the project. These constraints could be in terms of:
• Financial objectives – this is where a project may be selected on the basis of payback period,
ROI, NPV, etc. These may conflict with the project objectives and company objectives may take
preference. This could lead to increased project costs and delays.
• Marketing – one of the objectives of the organization may be to diversify into other markets.
The organization wouldn’t want to do this by being a loss leader and as such the project may
be operated under sub-normal profits.
• Partnership – the company may wish to take on a partner who has previous knowledge in the
project
• Industrial relations – it happens at times that there is unrest in the organization over matters
of pay and working conditions over which the project manager has no control.
4. External constraints relate to constraints imposed by parties outside the company and project spheres
of influence. They include:
• National and international laws and regulations
• Material and component delivery lead times
• Unavailable resources e.g. carpenters, bricklayers in certain areas of the country
• Environmental issues, government legislation and pressure group activities
• Climate conditions, rain, wind, heat, humidity
• Political unrest
• License requirements, planning, special permission
2.2.5 Evaluate Alternatives and Options
1. In the evaluation of solutions to the client, investigation of alternative solutions is helpful to the client
to aid in the selection of their requirements.
2. A checklist outlining such parameters as given below may help.
• Time – can the project be completed quicker?
• Cost – can the budget be reduced?
• Quality – can the project be made cost-effective?
• Resources – could the work be effectively automated?
• Technical – is there a simple design that may use cheaper materials, latest technology, etc.
3. To do the above tasks, you need to gather information from such sources as books, periodicals,
technical reports, specifications, etc.
4. Value management is a useful tool in evaluation of alternatives and options.
5. The aim is to come up with the right project with the least cost but at the right product quality.
6. This may require:
• Identification of unnecessary expenditure
• Promotion of innovation and creation of alternative ideas
• Simplification of methods and procedures
• Elimination of redundant items
2.2.6 Cost-Benefit Analysis
1. The cost-benefit analysis (CBA) could be done at this stage to find out whether the project should be
carried out or not.
 2. In the CBA, the costs and benefits are expressed numerically.
3. If the benefits exceed the costs, then the project is deemed to be viable otherwise it is not.
4. The CBA may be based on either the Pareto Improvement or the Hicks-Kolder criterion.
5. The Pareto Improvement states that “the project should make some people better-off without making
others worse-off” while the Hicks-Kolder Criterion states that “the aggregate gains should exceed the
aggregate losses”.
2.3 Business Case
1. The business case is developed from the identified business needs.
2. This is an important document in the success of a project.
3. The business case provides justification for the project in terms of:
• Its alignment with the objectives of the organization
• Evaluation of the projects viability
• Provision of the basis for establishing time, cost, and functional parameter of the project
4. The business case continues to evolve with development of the project.
5. The key business case questions that usually guide the evolution of the business case include:
(i) Strategic Fit
(ii) Evaluation of alternatives (Assessment of options)
(iii) Payback
(iv) Achievability
(v) Affordability
2.3.1 Strategic Fit
1. The strategic fit is the section in the business case that addresses how the proposed project fits into
the client’s existing business strategies.
2. It looks at the business need and how the completed project contributes to the organizational
objectives in terms of:
• How appropriate is the project’s timing
• The key benefits to be realized
• The anticipated key risks and critical success factors
• How will the project contribute to functional efficiency of the client organization
• How will the project provide a solid investment over time
• How will the project contribute to the fixed asset base of the client organization
3. The project itself may lead to generation of more money or increase the profitability of the
organization.
4. It could itself be an asset that provides the required income over a long period of time.
5. For instance, construction of a dam for a cooperative society could increase the efficiency and
performance of the cooperative.
6. Irrigation will improve leading to higher yields in the agricultural output of the cooperative and the
community.
7. The dam, i.e. constructed facility, could equally be an income generator for the cooperative society
through water supply and fishing levies.
2.3.2 Evaluation of Alternatives/Assessment of Options
1. Assessment of options is an important part of the business case. Several alternatives may be
considered and then one or a range chosen.
2. Before deciding to invest or to get into a project, this aspect is required and should be performed so
that the best solution is determined.
3. Consider our scenario. It could be that the client needs to decide how the packaging business is to be
carried out.
4. In such a case, the following could be his/her options:
• Build a new factory to produce packaging materials
• Put up an extension to his existing property to take care of the business need
 • Lease or rent property
5. From an economic point of view, renting is the easiest and perhaps cheapest compared to building as
one puts down a larger deposit of money for some time before they realize benefits.
6. With leasing, only smaller amounts will go into rentals.
7. This, however, may not be the best where tenure will be for an extended period of time.
8. Moreover, sub-letting may not be allowed and the property does not add to the organization’s assets.
9. So following such assessments, a detailed business case should be developed.
10. For each of these, a business case will have to be established.
2.3.3 Payback
1. Here we consider the proposed expenditure on the project against the expected value after the project
has been completed.
2. We look at the cost-benefit analysis of the project as well as the benefits to the objectives or
profitability of the organization.
3. Notice that all the costs of the project need to be considered. These may include direct and indirect
costs (initial costs), cost of borrowing, cost-in-use, cost of disposal, etc.
4. This also involves addressing funds available from current reserves.
5. In other words, the cost to be expended and the sources of the income will be identified.
6. Equally, the worth or value of the project will be assessed. This could be in terms of the net present
value.
7. It could also be return on investment e.g. 5%, 10%, or 15% or payback period. Worth or value could
be seen from:
• Greater or better productivity of the organization
• Improved efficiency of the organization performance
• The market value of the product if it is for sale
• Written down value (assets balance sheet)
2.3.4 Achievability
1. Under this aspect, the project should be investigated for its achievability in terms of time and budget.
2. The estimates of the likely costs of carrying out work need to be considered.
3. The time aspect needs to be considered especially where the project is tied to time due to political or
community or market expectations.
4. Ultimately, we will be determining whether the project is feasible in terms of time and cost as well as
expertise.
2.3.5 Affordability
1. The estimates of the cost of the project give an idea as to whether the client will have sufficient funds
or will need to borrow.
2. Research indicates that clients contribute 10% – 30% of total borrowing from reserves or available
funding.
3. Costs on a project are not all spent at the same time. Rather they are spent at intervals which may not
be regular.
4. Therefore, it is important that a project cashflow is prepared as well so that funding is planned.
2.4 Prioritizing the (Project) Objectives
1. The responsibility of the project manager is to meet a client’s objectives.
2. The vehicle through which this is achieved is a project.
3. It must be noted that projects are affected by the famous ‘iron’ triangle of time, quality and cost.
4. It has been found that balancing these elements of the triangle may be helpful to achieve the project
and the client’s objectives.

2.5 Selecting the Project

 1. Selecting a project especially amongst several is a nontrivial task.
2. This is because this process has been found to affect the success or failure of projects.
3. It is similar to selecting partners in an organization.
4. If the selection is done poorly or hurriedly without evaluating the possible risks and how to mitigate
them, failure is highly likely.
5. We can, therefore, safely say that we could avoid later problems by prudent selection of projects and
having a clear understanding of the risks and uncertainties involved in each project.
6. As we make our choices over which project to carry out or whether to proceed with the project at all,
we have to evaluate the risks and uncertainties.
7. Where we could contain or manage them, we could then proceed with the project.
8. However, depending on the type of organization, we still need to justify our choice to the owners,
senior managers, committees, etc.
2.5.1 Project Selection Models
There are techniques that are used to assist in the selection of projects. These techniques could be numeric or non-
numeric.
A. Non-numeric Models (Choosing without Numbers)
These models are used where for instance we do not have enough supporting information to enable us to calculate
the figures. They are highly subjective. Given below are examples of where non-numeric models may be used.
1. Where we are threatened with a flood or storm, we could decide to come up with a project to protect the
urban area by building dykes/shutters to stay away the flood waters. In this case, we need to react quickly
to the situation and decide or justify that the houses are worth saving. It could be that the possible costs of
repair may be higher than that of protecting.
2. Legal necessity arising from the government or regulatory agencies passing new laws. When these are
delivered, we have to abide by them and come up with the required projects to conform to the legal
requirements.
3. Employee welfare – some projects have to be done to abide by human resources policies. For instance,
employees need canteens and car parks. These do not bring in any financial benefit but are required for
employees to perform better. The choice then to carry out such projects is based on the expected benefit
to the employers.
4. Sacred cow projects - these are projects that are selected because people of influence have said they should
be carried out. For instance, managers will say that the roof be changed to make the building impressive.
Such project selection is surrounded with “political” intrigue and might even bypass the formal project
selection procedure.
5. Ranking. Comparative ranking is often used to choose between two similar projects. The characteristics of
each project are listed and ranked. The one with the best score (according to the ranking used) gets a go-
ahead. For instance, a comparison between Ford or Nissan Pick-ups could be based on such parameters as:
• Capital cost
• Maintenance cost
• Fuel consumption
• Ease of parking
• Maximum amount of tonnage
• Width and length of cargo area
• Torque/horse power
B. Numeric Models (Choosing by Numbers)
Numeric models employ such techniques as Payback Period, Rate of Return, Discounted Cashflow (Net Present
Value, Internal Rate of Return). These methods look at how and which project will give the best or maximum returns
or profits on investment.
• Payback Period
Payback period refers to the amount of time it takes to pay back the initial investment. A project with an initial
investment of $100,000 with an annual profit of $25,000 will pay back the investment in 4 years. For selection
purposes, the project with the shortest payback is selected.

Example 1: A company wishes to buy a machine for a four year project. The manager must choose between
project A and Project B proposed. Only one project can be selected. Which one should he select given
the data in the table below?
Year Cashflow Machine A (ZMW) Cashflow Machine B (ZMW)
0 (35,000) (35,000)
1 20,000 10,000
2 15,000 10,000
3 10,000 15,000
4 10,000 18,000
Payback period 2 years 3 years
Solution 1: From the table we can see that the payback period is 2 years for Project A and 3 years for Project B.

Based on this information, the Project Manager will select Project A if the payback period is the overriding
factor in the selection criteria.

• Rate of Return (RR) or Return on Investment (ROI)

This method looks at the rate of return the project outcome generates in percentages on the capital invested.
The method first calculates the average annual profit, which is the project investment deducted from the total
gain, divided by the number of years the investment will run. The profit is then converted into a percentage of
the total investment.

(𝑇𝑜𝑡𝑎𝑙 𝑔𝑎𝑖𝑛) − (𝑇𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡)

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑓𝑖𝑡 =
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑓𝑖𝑡

𝑅𝑂𝐼 = 𝑥100%
𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙

The project with the highest ROI usually gets selected.

Example 2: Given the situation in Example 2, which project should the project manager select?

Solution 2: The total gain for projects A and B is ZMW55,000 and ZMW53,000 respectively. The initial investment
is ZMW35,000 for both projects.
 55,000 − 35,000
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑓𝑖𝑡 𝑓𝑜𝑟 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝐴 = = 𝑍𝑀𝑊5,000 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚
4

53,000 − 35,000
𝐴𝑣𝑒𝑟𝑔𝑎𝑟𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑝𝑟𝑜𝑓𝑖𝑡 𝑓𝑜𝑟 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝐵 = = 𝑍𝑀𝑊4,500 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚
4

𝐾𝑅5,000
𝑅𝑂𝐼 𝑓𝑜𝑟 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝐴 = 𝑥100% =14.3%
𝐾𝑅35,000

𝐾𝑅4,500
𝑅𝑂𝐼 𝑓𝑜𝑟 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝐵 = 𝑥100% =12.9%
𝐾𝑅35,000

• Discounted Cash Flow Techniques - Net Present value (NPV) and Internal Rate of Return (IRR)
This technique takes into account the time value of money. ZMW100,000 today will not have the same worth
or buying power of ZMW100,000 next year. ZMW100,000 today is better because of inflation and the cost of
goods will rise eroding the buying power of ZMW100,000 next year. The two methods commonly used to
discount are NPV and IRR. These methods, which we shall be looking at soon, enable the project manager to
compare two projects or more with different investment and cashflow profiles. Notice that Discounted Cashflow
is dependent on accurate forecast of the cashflows as well as accurate prediction of interest rates.

Net Present Value (NPV)

To understand the NPV, we look at compound interest. If we invest ZMW100,000 today at 20% interest rate,
after 1 year it will be ZMW120,000 and after 2 years it will be ZMW144,000. Net present value is simply the
reverse. If we were offered ZMW120,000 1 year from now and the inflation and interest was 20%, working
backwards, its value would be ZMW100,000. This is the present value. When we combine the cashflows over
several years, it is called the net present value (NPV). NPV is normally tabulated and calculated as shown in the
table below.

Year Project cash flow Discount factor Present value

0
1
2
3
4
Total NPV

𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤 = 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑒𝑥𝑝𝑒𝑛𝑑𝑖𝑡𝑢𝑟𝑒

𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 = 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑓𝑎𝑐𝑡𝑜𝑟 𝑥 𝑐𝑎𝑠ℎ 𝑓𝑙𝑜𝑤

1
𝐷𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑓𝑎𝑐𝑡𝑜𝑟 = (1+𝑖)𝑛 where 𝑖 = 𝑓𝑜𝑟𝑒𝑐𝑎𝑠𝑡 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒

𝑛 = 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠 𝑓𝑟𝑜𝑚 𝑠𝑡𝑎𝑟𝑡 𝑑𝑎𝑡𝑒

Tables are usually used to read the discount factor as shown below.

Year 10% 15% 20% 25%

1 0.9091 0.8696 0.8333 0.8000
2 0.8264 0.7561 0.6944 0.6400
3 0.7513 0.6575 0.5787 0.5120
4 0.6830 0.5718 0.4823 0.4096

NPV is a measure of the value or worth added by carrying out the project. Therefore, a positive NPV with a project
is considered to be good. Where there are several projects, preference is given to those projects with the highest
NPV.

Example 3: Assuming that the Project Manager in example 1 uses a 20% discount factor, which of the two projects
should he select?
Solution: Project A
Year Project cash flow (ZMW) Discount factor (20%) Present value (ZMW)
0 (35,000) 1 35,000
1 20,000 0.8333 16,666
2 15,000 0.6944 10,416
3 10,000 0.5787 5,787
4 10,000 0.4823 4,823
Total income 37,692
Expenditure 35,000
Total NPV 2,692
Solution: Project B
Year Project cash flow (KR) Discount factor (20%) Present value (KR)
0 (35,000) 1 35,000
1 10,000 0.8333 8,333
2 10,000 0.6944 6,944
3 15,000 0.5787 8,681
4 18,000 0.4823 8,681
Total income 32,639
Expenditure 35,000
Total NPV (2,361)

From the tables, the project manager will most likely select Project A with an NPV of ZMW2,692 instead of Project
B with an NPV of ZMW 2,361. Notice that NPV expresses profits in absolute terms. Sometimes it becomes necessary
to express profit in % terms and this is where the IRR becomes useful.

Internal Rate of Return (IRR)

This method discounts future annual profits over a range of interest rates and then calculates the NPV for each of
the rates. The rate of which the interest rate is or the NPV is zero is called the IRR. The IRR is calculated in any of two
ways: trial and error or plotting NPV against IRR. The higher the IRR, the better the project is. To select whether to
implement a project is based on whether the IRR exceeds the cost of borrowing capital. Where it is below the cost
of borrowing, the project is rejected.
Approach 1: Trial and Error
This approach involves incrementing the discount factor until a negative NPV is obtained and the IRR is then taken
to be in between the DCF giving a last positive NPV and the one giving a first negative NPV.

Example: Using the trial and error, which project between Project A and Project B would the project manager select?

Solution: Let’s begin with Project A: Since the NPV is positive we need to increment the DCF in small steps to get a
negative NPV. Increasing the DCF by 2%, we get the following

Project A
Year Project cash flow (ZMW) Discount factor (22%) Present value (ZMW)
0 (35,000) 1 35,000
1 20,000 0.8197 16,394
2 15,000 0.6718 10,079
3 10,000 0.5507 5,507
4 10,000 0.4514 4,514
Total income 36,494
Expenditure 35,000
Total NPV 1,494

The NPV is still positive, so we need to increase it further. Let’s try 24%. The values work out as shown the table
below.

Project A
Year Project cash flow (ZMW) Discount factor (24%) Present value (ZMW)
0 (35,000) 1 35,000
1 20,000 0.8065 16,130
2 15,000 0.6504 9,756
3 10,000 0.5245 5,245
4 10,000 0.4230 4,230
Total income 35,361
Expenditure 35,000
Total NPV 361

Again the NPV is still positive, so we need to increase it further. Let’s try 25%. The values work out as shown the
table below.

Project A
 Year Project cash flow (ZMW) Discount factor (25%) Present value (ZMW)
0 (35,000) 1 35,000
1 20,000 0.8000 16,000
2 15,000 0.6400 9,600
3 10,000 0.5120 5,120
4 10,000 0.4096 4,096
Total income 34,816
Expenditure 35,000
Total NPV (184)

Finally the NPV is negative. So the IRR for Project A lies between 24% and 25%.

Solution: We continue with Project B. Since the NPV already negative it means we need to decrease the DCF in small
steps to get a positive NPV. Decreasing the DCF by 2%, we get the following
Project B
Year Project cash flow (KR) Discount factor (18%) Present value (KR)
0 (35,000) 1 35,000
1 10,000 0.8475 8,475
2 10,000 0.7182 7,182
3 15,000 0.6086 9,129
4 18,000 0.5158 9,284
Total income 34,070
Expenditure 35,000
Total NPV (930)

The NPV is still negative, so we need to decrease the DCF further, say to 17%. The values work out as shown in the
table below.

Project B
Year Project cash flow (ZMW) Discount factor (17%) Present value (ZMW)
0 (35,000) 1 35,000
1 10,000 0.8509 8,509
2 10,000 0.7397 7,397
3 15,000 0.6281 9,422
4 18,000 0.5401 9,722
Total income 35,050
Expenditure 35,000
Total NPV 050

At 17%, the NPV is now positive. This implies the IRR for Project B lies between 17% and 18%.

Interest Rate NPV Project A NPV Project B

17% - 050
18% - (930)
 19% - -
20% 2,692 (2,361)
21% - -
22% 1,494 -
23% - -
24% 361 -
25% (184) -

From the foregoing, the Project Manager is likely to select Project A since its IRR is higher than that of Project B.