A company owned exclusively by residents in the small Victorian coastal community of Lorne are offered three projects for which the cash flows are as follows in thousands of dollars. The directors work on 12 per cent as their RRR. Assume all cash flows occur at the end of the relevant years. There are no salvage values factored into the expected cash flows, and no salvage values are expected.

a. Calculate the four investment appraisal measures for each project.
b. Rank the projects and advise the directors which projects, if any, to accept. Give your reasons.

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Year 4 60 80 10 Year 5 20 80 140 Year 3 Year 0 200 150 -180 Year 2 80 40 Project Year 1 70 40 10