4. The following project proposals were made available for your analysis :

Lke Mathew

Sales revenue P 2,600,000 2,760,000

Cost of sales 57.5% 64.5%

Operating expenses 728,000 552,000

Depreciable assets 545,000 470,000

Economic life 5 years 6 years

Each project requires P1,200,000 initial investment

The corporation's cost of capital is 9% and the income tax rate is 30%

Required:

a. Annual cash returns

b. The payback period and the accounting rate of return.

c. Which project is superior ? should it be implemented?