Opportunities in the Construction Industry - Assignment Example

Insert Name: Date Due for the paper: Institution: City: State: Course: TABLE OF CONTENT PAGE 1.0. Introduction …………………………………………………………………..…… 3 2.0. SECTION A ………………………………………………………………….…… 3 2.1. Opportunities in the construction industry ………………………………... 4 2.2. Essential documents in company registration …………………………….. 4 2.2.1. Memorandum of Association ………………………………….. 4 2.2.2. Article of Association ………………………………………….. 8 2.2.3. Directors Declaration …………………………………………... 15 3.0. SECTION B ……………………………………………………………………...... 17 3.1. Economic responsibility in the industry …………………………………... 17 3.2. Three mutually exclusive projects ……………………………………….... 20 3.3. Ethical considerations in project appraisal ………………...……………… 21 3.4. Steps involved in the investment decision ……………………………….... 21 3.5. Importance of investment decision ………………………………..……… 24 3.6. Cash flows calculations for projects ……………………………………… 27 4.0. REFERENCES ……………………………………………………………………. 28 Section A: Introduction The building industry is classified into three main sections. The construction of building sector which comprises contractors typically identified as general contractors-who construct residential houses, manufacturing as well as business buildings among others. Heavy and civil engineering contractors put up sewers, roads, highways, bridges and tunnels in addition to other projects. Specialty business contractors execute specific activities connected to construction for example carpentry, painting, plumbing and electrical work. Construction is generally undertaken or harmonized by all-purpose contractors, who dedicate themselves to one category of construction like living houses or business buildings. Even though universal contractors might do a section of the toil in the company of their own crews, sometimes they subcontract majority of the building activities to heavy construction or specialty business contractors (Marcouse 1999, p.33). Specialty contractors generally specialize with only one construction activity, like painting, carpentry and electrical work. They take instructions for their work from general contractors, architects or property owners. Problem and Opportunity in the construction industry that can be addressed with civil engineering infrastructure projects or programmes Given the problem of lack of enough hotels bed rooms in London the construction industry is provided with an opportunity to construct modern hotel accommodation around the city. This problem of hotel bed rooms could be addressed with civil engineering infrastructure projects or programmes. Because, the industry’s activities comprise the construction of new structures, site preparation, plus accompaniments and adjustments to existing structures. The industry in addition incorporates maintenance, renovation as well as improvements on the structures (Gergen 1992, p.23) which could be offered in hotel building. Many countries around the world are geared towards development and achievement of millennium development in this new era of technological know-how which has spread around the world. This has challenged as to form a company that will contribute to these development activities in the construction industry-by utilizing the available resources in the industry. Documents required in registering a company to address the problem or exploit the opportunity a) Memorandum of Association NUMBER OF COMPANY: 653427 [45] THE COMPANIES ACTS 1948 - 1981 & 1985 COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL MEMORANDUM AND ARTICLES OF ASSOCIATION OF [INTEX CONSTRUCTION COMPANY] LIMITED [Incorporated on 2/02/2008] [Revised and Amended on 05/01/2009] [INTEX Construction Company] Limited Telephone: +44 547-674(0)20 ______________________________________________________________________________________________________________________________ THE COMPANIES ACTS 1980 & 2008 COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL MEMORANDUM OF ASSOCIATION OF [INTEX CONSTRUCTION COMPANY] LIMITED 1. The name of the company is ‘‘[INTEX CONSTRUCTION COMPANY] LIMITED’’ 2. The registered headquarter office of INTEX will be located in England. 1. The Company is set up for (a) Provide, preserve and develop main highways as well as roads to make ease of access to major transport routes. (b) The constructions of business buildings both within and outside the country. (c) The construction of residential houses as well as industrial. (d) To put up sewers, roads, highways, bridges and tunnels in addition to other projects. (e) Help unemployed people find employment (f) Provide training as well as re-training opportunities in the construction industry, particularly for unemployed citizens (g) Provide technical support in the building industry. (h) Provide buildings on favorable provisions to companies so as to venture in business and generate employment opportunities for unemployed individuals. (i) Preserve constructions in the regions that are of historical and architectural significance. (j) Provide public amenities In the provision of the said objectives, the Company shall have authority: To promote for the public benefit of urban or rural building regenerations in places of social as well as economic dispossession by all or any of the stated ways: (i) The assistance to curb unemployment in such means as may be considered fit, together with support to get employment (ii) The advancement of Construction teaching and training, mostly unemployed groups, and providing the unemployed groups with labor know-how (iii) The provision of technical support or construction advice as well as consultancy. (iv) The conception of training along with employment opportunities by the creation of workspace. (v) To put up for sale, mortgage, or dispose some of the property as well as assets of the company. (vi) To buy or else obtain plant along with machinery and to submit an application for their patent rights or copyrights. Provided that: I. The company’s objectives shall not go beyond the regulation of affairs among employees and employers. II. In the process the company obtain or hold some assets subject to the jurisdiction of the Construction Authority of England, the company shall not put up for sale, mortgage, or lease the asset with no consent of the owners. III. The profits as well as property of the company shall be functional only towards the backing of its objectives as stipulated forth in this Memorandum of Association. Provided that not anything herein shall stop some compensation in good faith by the company: 1) Of sensible and appropriate payment to any associate, official or employees of the company for services provided to the company in addition to of sound traveling everyday expenditure made in carrying out the duties of the company. 2) Of realistic and appropriate remuneration package to a project manager and/or company administrator who might be selected to manage the company/project. 3) The members’ liability is limited. 4) Of practical and appropriate rent for property left or let by any company member. 7) If in the lead of winding up or dissolution of the company, remains, following the contentment of the debts as well as liabilities owed, any possessions whatever, alike will not be remunerated to or dispersed between the members of the company, but will be relocated to a number of other construction institutions with objectives similar to the objectives of the company (OPSI 2007). WE, the numerous individuals whose details (names & addresses) are mentioned, are wishing for the ITEX’s controlling instrument as a created Company SHALL BE revised and amended, in chase of this Memorandum of Association. ------------------------------------------------------------------------------------------------------------- Names, addresses and descriptions of Subscribers b) Article of Association COMPANIES ACTS, 1980 & 2008 COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL ARTICLES OF ASSOCIATION Of THE INTEX CONSTRUCTION COMPANY LIMITED _________________________________________________ PRELIMINARY The set of laws enclosed in Table C of the Companies Acts, 1980 to 2008 shall be relevant to the Company As they are EITHER excluded OR verified herein. In these Articles: - “The Act” refers to the Companies Act, 1963. “The Directors” refers to the Directors for the time of existence of the Company or the Directors in attendance at a convention/discussion of the Board of Directors as well as comprises any individual in the position of Director by whatsoever given name described; “Secretary” refers to someone selected to execute the duties of the Secretary of the Company; “The Seal” denotes the Common Seal of the Corporation; “The office” denotes the registered headquarters for the time the Company is in operation. Unless the different purpose emerges, words or expressions enclosed herein (Articles of Associations) shall stand the equal connotation as described in the Act, otherwise any legislative amendment thereof in force immediately these Articles turn out to be obligatory on the Company (CH 2008). MEMBERS The proposed number of members to be registered with the Company is 12 however the Directors may perhaps register depending on a rising number of members. The members of the corporation as well as the Directors will only admit membership after subscribing to the Memorandum of Association. The rights as well as the liabilities connecting to some Company Members may well be varied on or after a given time by means of a Exceptional Declaration of the Company. GENERAL MEETINGS All Annual General Meetings (AGM) of the Company shall take place in the headquarter offices. As long as the Company embraces its opening AGM within 1year and 6 months after incorporation, it could do without holding the AGM in the year of its incorporation. The Directors might, at whatever time; think fit to organize for Special General Meeting as well as Annual General Meetings shall as well be summoned on such application or in defaulting to call for the meeting, it may be called together by such requests as given in Subdivision 132 of the Company Act. NOTICE OF GENERAL MEETINGS Subject to Sections 133-141 of the Company Act an AGM and any meeting convened for making exceptional declarations should be called after 21 days of the notice in script. The unintentional omission of providing note for the meeting to any individual permitted to be given the notice will not nullify the taking place of the meeting. PROCEEDINGS AT GENERAL MEETINGS No business activities will be carried out at some general meeting till a quorum of members is in attendance during the progress of the meeting. If within 30 minutes since the time requested for the meeting, there is no quorum, the meeting, when assembled ahead of the requisition of members, will be dissolved; it shall stand suspended till the same day in the following week at the same time and place. The Chairman, if present shall take the chair at all general meetings of the Company, or if he is not there within 15 minutes after the time appointed for the meeting to take place, the Directors in attendance shall appoint one of their member to chair the meeting. The Chairman might with the approval of some meeting with a quorum adjourn the progress of the meeting business left unfinished at the meeting at which the adjournment took place (OPSI 2007). At any general meeting a decision is reached by the vote, it shall be determined on a show of hands till a poll is demanded by the Chairman, or proxy. With the exception of as provision in Article 20 if an opinion poll is properly requested it shall be carried out in a way as the Chairman controls the poll which will be deemed as the decision of the meeting by which the poll was ordered. Every company member shall be entitled to one vote. BODIES CORPORATE ACTING BY REPRESENTATIVES AT MEETINGS. Whichever corporate body that is a member of the INTEX Company could by ruling of its directors give permission to individuals it believe fit to proceed as its delegate at any meeting of the Corporation, in addition to the chosen individual will be allowed to exercise the equal powers on behalf of corporate organization which he/she stands for. ANNUAL SUBSCRIPTIONS The Directors shall always be at liberty of determining any Annual Subscriptions to be paid by every member of the Corporation. Those subscriptions will be paid in advance of the 1st day of January in every year. The stipulations attached to Permanent Subscriptions will be resolute by the Company Directors in their total judgment varying one time to another. DIRECTORS The number of directors will be determined in writing by the company subscribers. RESIGNATION, CESSATION AND EXPULSION OF MEMBERSHIP (a)A member can by notice to the Company Secretary quit his membership. (b) Membership to the Corporation could automatically end on the member’s demise. (c) If any member repudiate or deliberately desert to abide by any of the Articles of Association rules. POWERS AND DUTIES OF DIRECTORS The business of the Corporation shall be controlled and managed by the Directors. The Directors shall appoint the attorneys of the company. DISQUALIFICATION OF DIRECTORS The Office of Director will be departed from if the Director; a) Holds any office or position of profit in the Company b) Is declared bankrupt in the State. c) Becomes banned as of being a Director by explanation of any order stipulated under Section 184 of the Act. d) Becomes of unsound mind. e) Resigns his/her office by notice in writing to the Company. f) Is condemned of an indictable offence. VOTING ON CONTRACTS A Director may possibly not vote in regards of any deal of which he/she has interest in or any issue coming up there out. SECRETARY The Company Secretary shall be selected by the Directors on terms and conditions as they consider fit; and he/she may still be removed by them. THE SEAL The Company Seal shall be utilized merely by the power of the Directors and all things toward which the seal will be affixed shall be signed by a Director as well as be countersigned by the Company Secretary. AUDIT Company Auditors will be chosen and their duties synchronized in agreement with Section 160-163 of the Company Act. c) Director’s Declaration COMPANY SPECIFIC ACCREDITATION SCHEME DIRECTORS DECLARATION Company name: INTEX CONSTRUCTION COMPANY LIMITED As part of the Intex’s Company Specific Accreditation Scheme, Applicants are expected to give a declaration by a director of the construction company to satisfy the vital administrative needs of the Accreditation Criteria, as outlined as follows: 1. Adequate Financial Resources I confirm that this company is a going concern, has adequate funds to go on with construction activities in agreement with the requirements of United Kingdom Company Law for more than one year and has enough finances to reimburse its debts immediately as they fall due. Name:____________________ Signature:_____________ Date:___________ 2. Quality Assurance Does the corporation embrace a standard quality management certification or its equivalent? a) (If yes, please present details) ____________________________________________________________________ ___________________________________________________________________ b) If not, does the corporation enclose a quality management scheme? (If yes, please provide details) ____________________________________________________________________ c) If the corporation does not embrace a quality guarantee or a quality management system, explain the way it will be ensuring that work is delivered to the standards expected; _____________________________________________________________ _____________________________________________________________________ 4. Professional Indemnity Insurance I verify that the corporation has certified indemnity for not less than $5,500,000 for any allege for the period of the Agreement with the Intex Construction Company as well as a phase of 5 years following end or cessation of the Agreement. 5. Undertaking Is the corporation self-sufficient from construction equipments and suppliers? Yes If no, satisfy position of your affiliation ______________________________________ 6. Accuracy of Information I confirm that the general information given in this document as well as the entire supporting credentials is a correct and perfect confirmation of the corporation. 7. Director’s Declaration I authenticate the truthfulness of this pronouncement and that the corporation satisfies the requirements of the Buildings and Strategic Design Certification Criteria. Name: _________________________________ Company:______________________________ Position: _______________________________ Signature: ______________________________ Date: __________________________________ Section B: The commercial and economic considerations taken into account in forming the company a) Economic responsibilities A corporation’s economic tasks are mostly payable to its shareholders. They own the company and expect return on their invested capital, for instance with the current problem of lack of enough hotel bed rooms in London, the project management will need to asses the benefits of the venture. This need to focus if people in city really need these facilities and evaluate the benefits to accrue on this operation. Shares need not to be completely paid up during allotment time. Payment could be postponed pending sometime and may not essentially be in cash, it might be in form of goods or services, chattels as well as shares in a different company (Clutterbuck 1992, p.15). The sum due to the company is a debit that preserve to be ‘‘called up’’. Shares will never be allotted at money off, which is, a smaller amount than the nominal value. The company should consider the classes of shares their shareholders hold since their interest is derived from them. For that reason, the core company responsibility is to maximize the shareholders’ return on venture. Employment change. The quantity of wage as well as salary occupations of many industries along with the construction business always expected to grow 11% (projected) from time to time. With the increasing demand for bed room hotels this is likely to create more job opportunities in the city. On the other hand, employments in the construction industry depend mostly on the intensity of construction and refashioning doings that is projected to swell more in the upcoming decade. Household growth. Even if household growth is anticipated to slow a little in the future years, the increase resolve to build demand designed for residential buildings, particularly in the highest increasing regions both the South as well as West (Gergen 1992, p.8). Growing population of immigrants in London city is calling for more hotel bed rooms to be constructed so that the clients may get the chance of even renting for a given period if they cannot purchase one. In addition to the kids of baby boomers, will create high demand for residential apartments. Moreover, a wish for better homes in the company of extra amenities will stimulate need for move-up residences, plus the reconstruction and development of older quarters. b) Legal responsibilities Under the legal domain, the key stakeholders are shareholders as well as some investors, employees, government and the general public. i) Responsibilities to shareholders and other investors The company should be obliged to offer shareholders in the company of other things, annual accounts and reports as well as invitations to the general meeting yearly. The company should also be obliged to offer other investors and debenture or bond holders, amongst others, yearly financial accounts plus reports. ii) Responsibilities to employees The key legal tasks to the employees of the company are obtained from employment contracts. Some of the stipulated terms are; Date as well as method of payment Provisions meant for yearly leave Provision designed for sick leave and Provision for expert improvement. iii) Responsibilities to government and government agencies The main legal responsibilities of the company towards the government are obtained from diverse statutes. The tasks comprise those connected with: Planning authorization for any construction or development effort Licenses necessary in undertaking activities related to building rules Fair trading doings Environment safety Yearly returns to income tax office Financial proceeds to Registrar of Companies. iv) Responsibilities to everyone The company’s major legal responsibilities to the public are mostly derived from the law of tort. Since it provides for individuals to claim their rights as well as get reimbursement for damage caused, loss or injury endured as a consequence of a company’s negligence in addition to ensuring that remedies are accessible wherever a civil mistake is obligated in a statute or else common law (Clutterbuck 1992 p.11). For instance of tortuous responsibility in the construction business may occur while construction activities deny a neighborhood of sleep or cause harm to workers. - The resident may sue the company for failure of earnings under tort. Moreover, accommodation facilities should be erected well on the ground to safeguard the customers as well as the future collapse of the building. v) Social responsibilities The company should consider its social responsibility to the public or surrounding organization. It should make sure that it good relation with the community around. Social corporate responsibility refers to the belief that a company should be accountable to the society which has in fact given it charter to be in business. It is the idea that has been deeply taken by many individuals as well as organizations that a company should take into account the social, ethical and environmental effects of its activities on its staff and the wider community around it (Clutterbuck 1992, p.17). Whatever a company does these days is viewed from the social responsibility point of view. Although this is a concept that was developed not long time ago, it has taken roots and everybody these days talks about it. Social corporate responsibility cuts across all the operations of any organization may it be public, private, governmental, non-governmental, profit making, or non-profit making et cetera. Being socially responsible as a corporate body or any business firm entails reviewing the policies and way that it has been relating with the relevant stakeholders to a more responsible and ethical and acceptable level. The other areas of corporate social responsibility are in the actual ding of business. A firm should in all respect conduct its affairs within the laws and regulations that govern that particular industry in which it is operating. All its activities should be both ethical and virtuous and not against the accepted codes of conduct in the society. It can also exercise responsibility in its disposal of waste products- it should not be onto water bodies or into the atmosphere for gases and especially the untreated affluent. Therefore all these show that social corporate social responsibility is matter of trying to be accountable to the community in which a firm is doing business by extending a hand into charitable engagements and avoiding doing certain things that may be considered as unethical or unacceptable by that society (Marcourse 1999, p.23-27). Health facilities Construction and equipping of hotels and other healthcare facilities geared towards serving the clients who have rented the bed rooms hotels, will be required to meet the desire for additional medical healing facilities, particularly by the increasing elderly people. More schools are required in the various places around the city (London) as well as the country (South and West) to cater for population that is rising the fastest. vi) Technological advancement The increasing technology around the globe is challenging more industries to develop their business to be IT based. For the case of hotel business, most bed rooms should be equipped with the current security and emergency gadgets to serve or meet the needs of the users of these facilities. Also the ability to trade online has led to formation of many companies. The technological know-how has tried to simplify the activities of many industries in the country. THREE MUTUALLY EXCLUSIVE PROJECTS The directors of Intex Construction Company Limited appointed Richardson Malcon as Project Manager for the construction of hotel bed rooms around London City. The company has raised £. 8 million through a right issue. Richardson has the task of evaluating three-mutually exclusive projects; both projects are expected to have zero salvage values. Their expected cash flows are as follows; Year Project X Project Y Project Z (£ million) (£ million) (£ million) 1 2 4 2.5 2 2.2 3 5 3 2.08 4.8 2 4 2.24 0.8 0.9 5 2.76 0 0 6 3.2 0 0 7 3.6 0 0 The amount raised would be used to finance either of the projects. The company expects to pay a dividend per share of £ 6.50 in one year time. The current market price per share is £ 50. The company also expects future earnings to grow by 7% per annum due to undertaking of either of the project. Intex limited has no debt capital in its capital structure. Required; a) Calculate the NPV of each hotel project. b) Which of the three the three projects will be selected. c) Identify and explain the circumstances under which the NPV method and IRR could rank mutually exclusive projects in a conflicting way. The professional and ethical considerations taken into account in Hotel project appraisal. Project appraisal is the procedure of evaluating as well as comparing of at least two project options so as to help in determining the best choice. The option or positioning standard could either be economic, social or environmental (Rogers 2001, p.12). It involves those decisions where a given company intends to undertake certain investments for those purposes of meeting/attaining the objectives of the company (shareholders wealth). Any business will invest its finance for the sake of deriving a return which is useful for the following main reasons;- i) To reward shareholders/owners of the business for staking there money in hotels investment, and by foregoing there current purchasing power in favor of current and future returns. ii) To reward creditors by paying them regular returns in the form of interest and repayment principle as and when it falls due. iii) To be able to retain part of their return for re-investment purposes which facilitates not only the company’s present growth and future growth but also has the implication of increasing the size of the company in terms of assets and volume sales. iv) For the increase in share prices and thus the credibility of the company in raising further finances is enhanced. Steps involved in the Hotel investment decision/project appraisal making project 1) Origination of investment ideas The hotel bed rooms’ investment undertaken by the business will always start with an idea which is then developed into a reality. In most cases investment ideas will originate from top management although in some cases depending upon the nature and complexity of the idea they can also result from lower level employees (Rogers 2001, p.18). 2) Estimation of the cost involved and expected returns. After the investment idea on the hotel bed rooms has been generated and accepted as a reality the management of the company should then estimate the costs involved in the investment project and also the expected returns. When estimating this costs and returns management need to consider any fluctuation that may occur in future. 3) Evaluate the viability of investment Ones the costs and return has been estimated the management should then evaluate the viability of the investment. In conducting this evaluation management may choose to any of the capital budgeting/ appraisal techniques for instance; a) Payback period (PA) b) Accounting rate of return (ARR) c) Net present value (NPV) d) Internal rate of return (IRR) e) Profitability index. (PI) 4) If the evaluation indicates that the hotel bed rooms’ investment is viable, the management should then set up a committee which will assist in the required finances. The committee should identify the;- a) Sources of finances and also b) Phases in which this finances will be committed. 5) After identifying the sources of the finances required, the management should then implement the project. The management should also continuously evaluate the implementation process so as to ensure that the investment project is being undertaken as per the recommended procedures. The techniques of project appraisal For many investment project to be implemented its viability must be assessed. Various methods can be used to evaluate the viability of building hotels bed rooms but any method selected must fulfill the following requirements; a) The method should be able to give an objective answer. Any capital appraisal method used must be able to closely indicate whether an hotel bed rooms investment should be accepted or rejected. b) The method should be in a position to rank various hotel investments available in the market in the order of profitability. c) The method should be in a position to accommodate any future investment opportunities as and when they arise. d) The method should be one that recognizes the fact that bigger returns and early returns are more preferable than late return. This is necessary because money loses its value overtime. Importance of Hotel investment decision a) They will influence company’s size. b) They increase the value of the company’s shares and thus its credibility c) They influence the company’s size Investment decisions are influenced by; i) political factors This influences competition, performance of economy as well as the changing tastes. ii) Technological factor This influences return of the company because it will affect the company’s ability to utilize its assets. The features of sound project appraisal techniques are; a) It should consider the time value of money by discounting the cash flows. b) It should give direct decision criteria on when to accept or reject a project. c) It should rank independent projects in order of their economic viability. d) It should distinguish between acceptable and unacceptable projects which are mutually exclusive e) It should generally be applicable to any conceivable project available. Problems that project managers may be faced with in hotel project appraisal; i) Lack of information on viable investment opportunities ii) Lack of adequate capital to undertake all viable independent projects iii) Uncertainty of future cash flows or benefits including method of assessing risk of a project iv) The appropriate appraisal technique to use v) Effects of inflation, changes in cost of capital and their qualitative information. The features of long term investment decisions the project manager should put in mind i) They involve significant amount of initial capital ii) They are usually irreversible-since reversing such decisions leads to loss iii) They involve risk and uncertainty with reference to economic life, cash flows, cost of capital, inflation rate, physical and technological changes iv) The benefits are received over a series of years v) They require privatization of scarce financial resources hence need to evaluate independent projects vi) There is a significant time lag between the time capital is committed and the time benefits/cash flows are reserved Cash Flows for the Projects Cost of Equity = do (1+g) +g po = 6.50 + 0.07 50 do – dividend per share g – future earnings po – price per share NPV = PV (Inflow) – PV (Outflow) PV = A r PVIF = 1 (1+r) n NPV for each hotel project Project X Year Cash flows (£) PVIF20%n Present Value (£) 1 2 000, 000 0.833 1,666, 000 2 2 200, 000 0.694 1,526, 800 3 2 080, 000 0.579 1,204, 320 4 2 240, 000 0.482 1,079, 600 5 2 760, 000 0.402 1,109, 520 6 3 200, 000 0.335 1,072, 000 7 3 600, 000 0.279 1,004, 400 8,662, 720 NPV = Total PV – Initial Capital = 8, 662, 720 – 8, 000, 000 = £ 662, 720 Project Y Year Cash flows (£) PVIF20%n Present Value (£) 1 4, 000,000 0.833 3,332,000 2 3, 000,000 0.694 2,082,000 3 4, 800,000 0.579 2,779,200 4 800,000 0.482 385,600 8,578,800 NPV = 8,578,800- 8,000,000 = £ 578, 800 Project Z Year Cash flows (£) PVIF20%n Present Value (£) 1 2, 500,000 0.833 2,082,500 2 5, 000,000 0.694 3,470,000 3 2, 000,000 0.579 1,158,000 4 900,000 0.482 433,800 5 2, 600,000 0.402 1,045,200 8,189,500 NPV = 8,189,500- 8,000,000 = £ 189,500 DECISION: For the mutually exclusive investment the project manager should select project X since it has the higher NPV. Note: For hotel investment projects that are independent select all those projects that have a positive NPV. However if the amount of capital available is limited, rank the hotel investment projects in the order of their NPV, starting with the highest to lowest. Select then a combination of projects that satisfy the capital limitation (Rogers 2001, p.25). Reference List Office of Public Sector Information. 2007, Companies Act 2006, viewed 13 January, 2009, < http://www.opsi.gov.uk/acts/acts2006/ukpga_20060046_en_1>. Companies House. 2008, Site map for Companies House website, viewed 13 January, 2009, < http://www.companieshouse.gov.uk/sitemap.shtml > Rogers, M. 2001. Engineering project appraisal. Oxford: Blackwell Science Clutterbuck, D. 1992. Identifying and managing social responsibility. Business Ethics: A European Review, 1(1), 34-8. Gergen, K. 1992. Organisation theory in the postmodern era. In: M. Reed and M. Hughes, eds. Rethinking organisation: New directions in organisation theory and analysis. London: Sage, pp. 207 – 26. Marcouse, I. ed. 1999. Business studies. London: Hodder and Stoughton. See reference OPSI – see Office of Public Sector Information CH – see Companies House Read More