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A firm is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows. The discount rate is 9% Project A

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A firm is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows. The discount rate is 9% Project A Initial investment 50,000 OMR End of year cash flows 20,000 OMR 20,000 20,000 Project B End of year cash Initial investment flows 80,000 OMR 45,000 OMR 45,000 45,000 (10 marks) 1. Critically estimate the Net Present Value for the projects. 2. Evaluate the Internal Rate of Return for project A and project B. 3. Based on your analysis, which project should be accepted? (10 Marks)

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