Instructions: All answers must be typed in and all workings must be shown.

QUESTION FOUR The directors of Akazi Investments Limited are considering two mutually exclusive projects. Both projects are concerned with the purchase of land for building later on. The cost of capital on each project is 10% Discount Factor Period Project A Project B 0 100 000 60 000 1 Initial outlay Cash inflows 1 2 60 000 30 000 40 000 36 000 16 000 28 000 0,909 0,826 0,751 3 Required: Calculate the net present value of each of the projects and state which of two projects should the directors accept and why