XYZ Manufacturing Ltd. is considering two mutually exclusive projects in Kuwait. Both projects require an initial investment of KWD 50,000. The after-tax cash inflows associated with each project are as follows in KWD:

Year	Cash Flows (Project A)	Cash Flows (Project B)
Initial Investment	(50,000)	(50,000)
1	15,000	10,000
2	20,000	15,000
3	10,000	20,000
4	5,000	25,000

Requirements: a. Calculate the payback period for Project A and Project B. b. Determine which project the company should invest in and justify your answer. c. If the cost of capital is 8%, calculate the Net Present Value (NPV) for both projects and decide which project should be chosen based on NPV.

Answer rating: 100% (QA)

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