Task B (90

Mr. Sultan is a High-Net-Worth-Individual based in Salalah. He hails from a traditional business family. He is preparing himself to start a new business and wishes to understand Financial markets and the nuances of financial investment. So, he has approached you to support him on the following aspects,

1. Mr. Sultan seeks clarity from you regarding what should be the priority of the new business that he is likely to start, creating wealth or maximizing profit. Prepare a report which will help Mr. Sultan to decide.

2

Mr. Sultan has presented the following details to you about his project cash inflows and outflows and he has asked to you help in his decision making whether he should invest in this project or not. (40 marks) Initial investment is OMR 200,000 Cash inflows are as follows, Year 1 Year 2 Year 3 Year 4 60,000 70,000 60,000 70,000 . Cost of capital 12% Mr. Sultan wants to recover the Initial investment within 3 years or less. . A. Calculate Pay-back period. (2 marks) B. Calculate Discounted Pay-back period. (3 marks) C. Calculate Net Present value. (3 marks) D. Calculate Profitability Index. (2 marks) E. Calculate Internal Rate of return (5 marks) F. Calculate Modified Internal Rate of return (5 marks) G. Recommendations based on each technique. (5 marks) H. Discuss about each of the technique used above by highlighting TWO features for each technique used for calculations and the discussion must be appropriately cited and referenced from relevant academic literature sources. (15 marks)