Layton LTD's other business activity involves the selling of real estate, primarily the sale of properties that they develop themselves. Layton LTD was very cautions over the years and has managed to save up 150,000. Layton LTD has shown interest in two very different projects they would like to undertake, however give the scarcity of resources only one can be chosen. The first project is for Layton LTD to grow internally by expanding its operations to other areas of Malta. The second project available for Layton LTD is to invest in their current premises and update their technology and buildings. The following data for the two different investment opportunities are given hereunder.

Data Project A Project B

Initial Investment outlay () 150,000 90,000

Economic Life (years) 7 4

Liquidation value () 15,000 5,000

Net cash flows ()

t1 38,000 32,000

t2 40,000 36,000

t3 45,000 38,000

t4 42,000 38,000

t5 40,000

t6 45,000

t7 50,000

Relevant discount rate (%) 8% 8%

a. Finding the investment appraisal for Project A and Project B for Layton LTD utilising the Net Present Value (NPV) technique and the Internal Rate of Return (IRR) technique. Evaluate the results of both and provide recommendation that which project will you chose.