Click Submit to complete this assessment Question 5 Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The economic life of both projects carry same risk. Batelco Inc uses a discount rate of 12%. After considering the current economic situation Batelco Inc. has set a maximum payback per financial analyst, prepared estimates of the annual revenues and costs associated with each project as in the below table: Cost of equipment Projects A 240,000 Projects B 470,000 Working Capital needed Overhaul of the equipment in 60,000 80,000 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses 180,000 90,000 Depreciation expense 48,000 78,333 Fixed out-of-pocket operating 90,000 70,000 costs Life of Project 5 year 6 years The working capital will be released 5th and 6th Required: year of the project A and project B respectively, for investment elsewhere within the company Calculate the net present value for each piect (4 Marks) Quenton Sof 10 points Saves Each project requires an initial investment as presented in the below table. The economic life of the project A will be 5-Year's and Project B will be 6 years, and 6. After considering the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (ROI) 18% A mssociated with each project as in the below table: Projects A Projects B Cost of equipment 240,000 470,000 Working Capital needed 60,000 80,000 Overhaul of the equipment in 12000 14000 two years Annual revenues and costs: Sales revenues: 375,000 300,000 Variable expenses 180,000 90,000 Depreciation expense 48,000 78,333 Fixed out-of-pocket operating costs Life of Project project B respectively, for investment elsewhere within the company 90,000 70,000 5 year 6 years working Capital needed 60,000 80,000 Overhaul of the equipment in 12000 14000 two years Annual revenues and costs: Sales revenues 375,000 300,000 Variable expenses 180,000 90,000 48,000 78,333 90,000 70,000 5 year 6 years Depreciation expense Fixed out-of-pocket operating costs Life of Project The working capital will be released 5th and 6th year of the project A and project B respectively, for investment elsewhere within the company. Required: 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product. (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark) Present value tables are given below to determine the appropriate discount factor(s) using the tables provided Optix HAGETIC Table of present value $1 msi