. 2. a) (a) Calculate the average accounting rate of return (calculated as average net income divided by average book value over the project's life) for an investment costing 35,000,000 with a four-year life and annual net income of 6,500,000 for each of the first three years and 4,000,000 in the final year. Assume straight-line depreciation to zero over the project's life. (5) (b) Consider the following three investment projects: Project Year 0 1 2 3 4 5 U AWNO A Cash-flow () -900,000 270,000 270,000 270,000 270,000 270,000 B Cash-flow () -810,000 270,000 157,500 292,500 315,000 135,000 Cash flow () -1,350,000 450,000 360,000 450,000 337,500 427,500 The relevant cost of capital is 10% Required: 0 (ii) (iii) (iv) Calculate the payback period for each project. (6) Calculate the discounted payback period for each project. (7) Calculate the internal rate of return (IRR) on each project (for project B try 11% and 16%; for project C try 12% and 17%). (10) Calculate the net present value (NPV) of each project. (10) Calculate the profitability index for each project. (3) Calculate the modified internal rate of return (MIRR) for each project using the reinvestment approach. (9) (50) (v) (vi)