ABC CO. is evaluating a new project with an estimated cost of OMR 70,000. Operating cash inflows for four years are, OMR 15,000, OMR 30,000, OMR 40,000 and OMR 15,000 respectively. The residual value at the end of the project life is OMR 20,000. The risk free discount rate is 11% and risk premium is 5%.

1. Calculate project NPV at the risk free discount rate.

a) OMR 7,000

b) OMR 20,810

c) OMR 20,180

d) OMR 7,00

2. Calculate project NPV at risk-adjusted discount rate.

a) OMR 10,180

b) OMR 860

c) OMR 10,810

d) OMR 860