1. Omar is the owner of a private school is considering the purchase of six school buses to transport students to and from school events. The life of each bus is estimated to be 3 years, after which time the vehicles would have to be scrapped with no salvage value. School management doesnt have money recently; it could go to finance through bank totally or partially. The schools revenue mainly comes from tuition fees. According to the previous years school made profit which encourage management to expand the revenue by purchasing buses.

Suppose that Mr. Omar has hired you as a consultant to help them make the decision.

Please draft an official memo to them with your analysis and recommendations.

Your submission should cover the following questions:

1.Briefly, summarize the key facts of the case and identify the problem being faced by

Mr. Omar. In other words, what is the decision that they need to make?

2.What are some approaches that can be used to solve this problem? What are some

various criteria or metrics that can be used to help make this decision?

3.What are the important factors the financial manager should consider before making

decision? Explain?

4. If the figures are not certain, how would you deal with this situation?

5.If the initial investment OMR 600,000 and the project is expected to generate cash

flow after adjustment OMR 250000, OMR 300000, OMR 200000 at the end of year

1,2 and 3 respectively. Is it wealthy to purchase the buses? explain

2. Discuss and explain what are the different methods as financial Manager could use for

evaluating projects? Why using one method than others