1.Consider the following are mutually exclusive project .Whichever project that will be chosen, a 15% return is required on both investment.

Year Cash Flow (M) Cash Flow (N)

0 (RM350,000) (RM40,000)

1 RM30,000 RM19,000

2 RM60,000 RM12,000

3 RM60,000 RM18,000

4 RM400,000 RM10,500

(a)Apply the discounted payback criterion and state which investment is chosen.

(9 marks)

(b)Apply the NPV criterion and state which investment is chosen.

(6 marks)