Case 2: Financial Appraisal (10 Marks) You are a new associate at a well-known financial consulting firm. As part of the firm's in-house training program you have just visited a client company. Next week you will present your recommendations for the investment strategy that will best enhance shareholder value for the client. The company is contemplating on two mutually exclusive projects. Advice your client the best way to enhance shareholder value. Project A: This project has an investment outlay of OMR 260,000. The project has a life of 5 years with a zero salvage value. The Project is expected to generate profit after tax (PAT) of OMR 70,000, OMR 20,000, OMR 70,000, OMR 50,000 and OMR 10,000 at the end of year 1, 2, 3, 4 and 5 respectively. The minimum expected rate of return is 15%. Project B: This investment proposal has an investment outlay of OMR 210,000. The project has a life of 5 years with OMR 20,000 salvage value. The Project is expected to generate profit after tax (PAT) of OMR 60,000, OMR 10,000, OMR 70,000, OMR 40,000 and OMR 15,000 at the end of year 1, 2, 3, 4 and 5 respectively. The minimum expected rate of return is 15%. The board of directors of your client company has asked your consulting firm for advice on its investment strategies to create more value for shareholders. Required: (Please show your solutions/calculations as required) A. Evaluate the project's acceptability using ARR. (2 Marks) B. Discuss with management other more appropriate evaluation techniques that is aligned with maximizing the value of the firm? (5 Marks) C. Identify possible risk in estimating the profit after tax and life of the project, explain the impact of changes in these estimates to the acceptability of the project