Omen Ltd is considering two mutually exclusive projects, Project A and Project B. Project A will cost

$100,000 today and Project B will cost $90,000 today. Following are the expected after tax cash flows

of each project for year 1 year 4 (cash flows occur at the end of each year.) Omen Ltd requires 11%

pa required rate of return.

End of Year

Cash Flow of A ($) Cash Flow of B ($)

End of year	Cash flow A	Cash flow B
1	30,200	25000
2	35,000	28000
3	28,000	29000
4	38,500	38000

a. Calculate the Net Present Values (NPV) of Project A and Project B. (Show answer correct to the

nearer cent.) 5 Marks

b. Explain which project the company should choose.