Question 1 [10]

Shell Group of companies is evaluating two investment projects whose cash flows are:

Point in time (yearly)	Project A	Project B
0	-120 000	-120 000
1	60 000	15 000
2	45 000	45 000
3	42 000	55 000
4	18 000	60 000

The companys required rate of return is 15 per cent

1.1. Advise the company whether to undertake the two projects. (6)

1.2. Indicate the maximum outlay at time 0 for each project before it ceases to be viable. (4)