=+5" Maple ple is considering which of two mutually exclusive projects to accept, each with a five-year life. Project A requires an initial expenditure of £2,300,000 and is forecast to generate annual cash flows before depreciation of £800,000. The equipment pur-

chased at time zero has an estimated residual value after five years of £300,000.

Project B costs £660,000 for equipment at the start. This has a residual value of

£60,000 after five years. Cash inflows before depreciation of £250,000 per annum are anticipated. The company has a straight-line depreciation policy and a cost of capital of 15 per cent. You can assume that the cash flows are also equal to the profits before depreciation. Calculate:

a an accounting rate of return;

b the net present value.