3. Ring plc is planning to invest in Glumrovia and the company require a return of at least 10 percent on the project. Market research suggests that cash flows from the project in the local currency (the dollar) will be as follows: Year 1 2 3 4 5 $000 180 225 180 210 160 The current exchange rate is $3.00/1; in subsequent years it is expected to be: Year 1 2 3 4 5 $/ 4.00 5.00 6.00 7.00 8.00 The project will cost $330,000 to set up and has no scrap value. The company's current return on capital employed is 12 per cent (average investment basis) and the company uses straight-line depreciation over the life of the project. The company's average payback period of its existing projects is 5 years. Required: (a) Advice Ring plc if the project should be undertaken if: (1) The net present value (NPV) method of investment appraisal is used (calculate the NPV in ); (ii) The internal rate of return method of investment appraisal is used; (iii) The return on capital employed method of investment appraisal is used. (iv)The payback period method of investment appraisal is used. (b) Discuss the possible problems that a company like Ring plc might confront when making this type of decision. 3. Ring plc is planning to invest in Glumrovia and the company require a return of at least 10 percent on the project. Market research suggests that cash flows from the project in the local currency (the dollar) will be as follows: Year 1 2 3 4 5 $000 180 225 180 210 160 The current exchange rate is $3.00/1; in subsequent years it is expected to be: Year 1 2 3 4 5 $/ 4.00 5.00 6.00 7.00 8.00 The project will cost $330,000 to set up and has no scrap value. The company's current return on capital employed is 12 per cent (average investment basis) and the company uses straight-line depreciation over the life of the project. The company's average payback period of its existing projects is 5 years. Required: (a) Advice Ring plc if the project should be undertaken if: (1) The net present value (NPV) method of investment appraisal is used (calculate the NPV in ); (ii) The internal rate of return method of investment appraisal is used; (iii) The return on capital employed method of investment appraisal is used. (iv)The payback period method of investment appraisal is used. (b) Discuss the possible problems that a company like Ring plc might confront when making this type of decision