● 12. A Company can make either of two investments at the beginning of 2003. Assuming a required rate of return of 10% p.a., evaluate the investment proposals under (i) Payback Profitability, (ii) Discounted Payback Period and (iii) Profitability Index. The particulars relating to the projects are given below:

Project E Project F Initial outlay (`) 20,000 28,000 Estimated life (years) 5 5 Scrap value (`) Nil Nil Net Cash Flow (`)

End of 2003 4,000 7,500 2004 5,000 8,750 2005 6,000 7,500 2006 9,000 7,500 2007 5,000 7,500 It is estimated that each of the alternative proposals will require an additional working capital of `2,000 which will be received back in full after the expiry of each project life. The present value of `1, to be received at the end of each year, at 10% p.a. is given below:

Year 1 2 3 4 5 P.V. Factor (`) 0.909 0.827 0.751 0.683 0.621