ABC CO. is evaluating a new project with an estimated cost of OMR 140,000. Operating cash inflows for four years are, OMR 30,000, OMR 60,000, OMR 80,000 and OMR 30,000 respectively. The residual value at the end of the project life is OMR 40,000. The risk free discount rate is 11% and risk premium is 5%.

1. Calculate project NPV at the risk- free discount rate.

a-OMR 40,360

b-OMR 14,000

c-OMR 7,666

d-OMR 40,630

2. Calculate project NPV at risk-adjusted discount rate.

a-OMR 2,170

b-OMR 20,630

c-OMR 1,720

d-OMR 20,360