Acompany, Fairground, has a choice between investing in one of three projects: the Rocket, LO1 the Carousel or the Dipper. The cost of capital is 8%. There are the following cash flows.

Rocket Carousel Dipper E £ a Initial outlay (18,000) (18,000) (18,000)

Cash inflow Year 1 8,000 6,000 10,000 Year 2 8,000 4,000 6,000 Year 3 8,000 14,000 5,000 Required:

An evaluation of Fairground using:

(i) the payback period

(ii) the accounting rate of return (assume cash flows are equivalent to profits)

(

(

iii) net present value iv) the internal rate of return.