4. (a) A company has to choose one of the following three mutually exclusive projects. Which project.

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4.

(a) A company has to choose one of the following three mutually exclusive projects. Which project. is the most desirable? Assume a required rate of return of 12 per cent.

Rate of Projects Co C C C, Return (%) P Q (*)-50,000 25,270 25,270 25,270 24 (R)-25,000 5,000 5,000 25,570 15 ()-28,000 12,670 12,670 12,670 17

(b) Compute the corresponding incremental cash flow for projects P and Q in problem 4(a). Which project is more desirable?

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