Imp.

A restaurant is experiencing a capacity shortage problem. To upgrade the capacity, initial investment is expected to be OMR 50,000. It is expected that revenue will increase by OMR 17,500 in year 1, OMR 20,000 in year 2, OMR 24,500 in year 3, and OMR 26,000 in year 4. Upgrading the capacity will incur additional costs of maintenance and staff salaries by OMR 4,500 per year. Applicable annual compounding interest rate is 8%. a) Based on the information given, draw a cash flow diagram. (01 Mark) b) Compute the equivalent net present worth of cash flows. (2.5 Marks) c) Compute the equivalent net future worth of cash flows at end year 4. (2.5 Marks)