Ahmed is planning to invest his money in a project (A) that requires an initial cost of $1,000 and expected to generate net cash flows of $300 and $1,500 at the end of the next two years respectively.

Assuming that the cost of capital is 10%, the annual cash flows discounted are calculated as follow

Period	Annual cash flows	PV Factor	Annual cash flows Discounted @10%	Discounted Cash Flows Cumulative
0	($1,000)	-	-1000	-1000
1	300	0.909	272.7	-727.3
2	1,500	0.826	1239	511.7

From the information given:

1. Calculate the projects payback period.

(2 Marks)

2. Calculate the projects discounted payback period given that cost of capital is 10 %.

(2 Marks)

3. Calculate the projects NPV.

(2 Marks)

4. According to the results in the section (c.); should Ahmed invest his money in the project

or not? Explain.

(3 Marks)

5. Given that IRR for this project (A) is 12%, compared to another project (B); that has

IRR= 11%? Evaluate project (A).

(3 Marks)