a) Make That Money Limited (MTM) is assessing the viability of two investment opportunities in Middle East. The first project is in the retail industry and requires an initial outlay of US $88,000. The second project is in the business process outsourcing (BPO) sector and requires an initial capital outlay of US $158,000. The cost of capital for both projects is 15% and the cash inflows for each project are detailed in the table below.

Year	Retail US $	BPO US $
1	31,000	63,000
2	32,000	0
3	24,000	58,000
4	0	66,000
5	45,000	57,500

i) Calculate each project's Payback period (4 marks)

ii) Assuming that the projects are mutually exclusive, which project(s) would you recommend according to the Payback period? Why would you make this recommendation? (2 marks)

iii) Calculate each project's Net Present Value (NPV). (6 Marks)

iv) Assuming that the projects are independent, which project(s) would you recommend according to the NPV? Why would you make this recommendation? (2 Marks)

v) Calculate each project's Discounted Payback Period. (6 Marks)

b) As a financial analyst at a major firm, you have been asked to make a recommendation about the following mutually exclusive projects.

	Project A	Project B
NPV	$52,000	$55,000
IRR	30%	20%

Which project(s) would you recommend? Explain your decision. (5 Marks)