The following information was provided for two mutual exclusive investment opportunities, only one of which may be selected.

	Project A	Project B
Initial Investment(CF0)	100 000	90 000
Year(t)	Profit for the year
1	50 000	35 000
2	40 000	35 000
3	30 000	33 000
4	30 000	70 000
Resale cash value Year 4	20 000	30 000

Notes

o Profit is calculated after deducting straight line depreciation.

o The cost of capital is 18% per annum.

a) Calculate annual depreciation amount for each project.

b) Compute cash flow from operation for each project.

c) Estimate net present value for each project.

d) Based on analysis above, which project would you recommend for the firm.