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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 5-Year's and Project B will be 6 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: Projects A Projects B 240,000 470,000 Cost of equipment 60,000 80,000 Working Capital needed 12000 14000 Overhaul of the equipment in two years Annual revenues and costs: 375,000 Sales revenues 300,000 180,000 90,000 Variable expenses 48,000 78,333 Depreciation expense 90,000 70,000 Fixed out-of-pocket operating costs Life of Project 5 year 6 years Life of Project 5 year 6 years The working capital will be released 5th and 6th 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)