1. Salalah Chemical Company is considering two proposals for long term investment. Both will operate for 5 years, but due to limitation on capital the company can accept only one out two projects. The following information is available relating to : Methanol Fertilizer project Project Initial investment RO RO (100,000) (100,000) Operating Profit before depreciation year 1 60,000 54,000 Operating Profit before depreciation year 2 50,000 46,000 Operating Profit before depreciation year 3 40,000 40,000 Operating Profit before depreciation year 4 30,000 36,000 Operating Profit before depreciation year 5 25,000 25,000 Scrap value at the end of 5 years 10,000 10.000 The company's standard payback period is 2.5 years and standard ARR is 12%. The cost of capital is 10%? Required: (i) Calculate Accounting Rate of Return for both Methanol and Fertilizer project. Calculate Payback Period of Project Methanol and Fertilizer. (iii) Calculate the NPV of Methanol and Fertilizer project. + Year 4 PV Factor 0.909 0.826 0.751 0.683 0.621 @ 10% 3 5 (iv) Calculate Profitability Index for both projects. Calculate IRR of Methanol and Fertilizer project NPV is negative RO 1,956 @ 40% for Menthol Project NPV is negative RO 5,359 @ 40% for Fertilizer Project Present the overall results of above in a table and recommend one best proposal to management. Give recommendation for your recommendation