Assume you are hired as a consultant to ELILI HOTEL. The director of capital budgeting has asked you to analyze two proposed capital investments, projects A and B. Each project requires an initial investment cost of Br. 240,000 and the cost of capital for each project is 11.5 percent. The projects' expected net cash inflows are as follows(after tax):

Year

Project A

Project B

1

Br. 156,000

Br. 84,000

2

72,000

84,000

3

72,000

84,000

4

24,000

84,000

Required:

Calculate each project's payback period, net present value (NPV) , internal rate of return (IRR)and Profitability index (PI)

Which project should be accepted if they are independent?

Which project should be accepted if they are mutually exclusive?