Answer to sample questions 1. (a) Present value of cash inflows Years Cash inflows OMR Discount factor @ 12% 1 2,30,000 0.893 Present value OMR 2,05,390 N 2,28,000 0.797 1,81,716 1,97,936 3 2,78,000 0.712 4 2,83,000 0.636 1.79,988 0.567 1,54,791 5 2,73,000 6 80,000 0.507 40,560 Total present value 9,60,381 The student should note that the total present value is lower in this case than 10% rate as used earlier