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Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an initial investment as presented in the below table. The economic life of the project A will be 6 Year's and Project will be 5 years, and both projects carry same risk Batelco Inc uses a discount rate of 12%. After considering the current economic situation Batelco Inc. has set a maximum payback period of 4 years and minimum return on investment (ROI) 18%. A financial analyst, prepared estimates of the annual revenues and costs associated with each project as in the below table: 18 Projects B Projects A 240,000 Cost of equipment 470,000 Working Capital needed 60,000 80.000 Overhaul of the equipment in two years 12000 14000 Annual revenues and costs: 375.000 300.000 Sales revenues 180,000 90.000 Variable expenses 74,000 60.000 Depreciation expense 70.000 90,000 Fixed out-of-pocket operating costs 5 years 6 year Life of Project 120 Atten Asse Besp Grading Additio Refresh you sull BULLAK 74,000 Fixed out-of-pocket operating costs 90,000 70.000 Life of Project 6 year 5 years The working capital will be released 6th and 5th year of the project A and project B respectively, for investment elsewhere within the company. Required: 1. Calculate the net present value for each project. (4 Marks) 2. Calculate the simple rate of return for each product. (4 Marks) 3. Which of the two projects (if either) would you recommend that Batelco Inc. accept? Why? (2 Mark) Present value (table 148-1) is given below to determine the appropriate discount factor(s) using the tables provided. Table 14B-1 Present Value of $1 Table Summary: Table of present value $1. Periods are listed in first column 1-15 Perk + 4 . . . . 7 P 4 AM 6.M 8701 BAFT CA 4.31 Da Questions Filter (5) www ..Am SM PULY new NIFE AMY www komast ja mpang kamang pag CH Lav L P IN 4.70 600 4427 INCE 2.318 E www nes 179 LWLM www. www AM { HED. HET LI com on www Fr CMM LAW LEW COM AME CH inve AMI L IME THE www K www wwww FLE BAL 116 S GARE LIH 8411 SON Krst Previous VIVE www OVE INES www a INY * KVI LIST mi LAM LM In LARI AB LIME SA KAN AME *** new DEK 4409 S Lan www AM WAY AM FE LAY Ga www H *3 LIH 120 Last saved 400 PM Submit