Question: the answer 1. ABC Company is considering following two mutually exclusive projects in Oman. Each requires an initial investment of OMR 40,000. The after tax

the answer 1. ABC Company is considering following two mutually exclusive

the answer

1. ABC Company is considering following two mutually exclusive projects in Oman. Each requires an initial investment of OMR 40,000. The after tax cash inflows associated with cach project is as follows in OMR Year Cash flows (Project X) CE (Project Y) (Initial Investment) 40,000 20,000 20,000 5.000 2.500 40,000 10,000 5.000 15,000 20,000 a. Calculate the payback period for Project X and Project Y b. Which project should the company invest in and why? 2. The cash flows (CFS) of project A which you are considering to invest are given below. If the cost of capital of the project is 5%, would you accept the project based on Net Present Value method? Show the calculation to support your decision Project A End of Year -60,000 20,000 15,000 30,000 20.000

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