Imagine you have K 6.5 million at your disposal to invest in your various options of investments. However you have no indication on how to effectively go about it and accordingly make a quality decision, but you have some indistinct ideas. One option available to you is to build a block of flats or invest this lump sum in undisclosed type of investments. You are also privy to the fact that building flats will yield the same returns if you invested in these other unrevealed investment options available over same life span [you will need to mention them in (d)]. Assuming in the economy you are domiciled in, the prevailing interest rates are pegged at 35 percent and to complete a block of flats it will take you 3 years, of which inflation is at 25 percent. Further you should note that other factors of investment are only varied in long run to increase your available lump sum of investment, which may be constrained by the rising inflation as time rolls on.

REQUIRED
a) Calculate the net present value of your investment sum over the 3 year time horizon?

b) What principle would be relevant to the understanding of variation of factors of investment in the SR and LR?

c) Further, by applying relevant managerial principles (which you should mention here) to surmount this conflict show why it would be rational to invest in other investment options other than building flats to resolve this investment choice problem you are confronted with?

d) From your calculations and knowledge of managerial principles, mention the type of instruments of investment you would have used here to invest your money, other than building flats, if you had adequately evaluated your investment options?

e) Based on your computations and comparisons which investment option is more technically viable and appealing, further state the managerial principle you would apply to make effective and quality decision for this, based on time horizon, give reasons for your answer?