ABC It'd, a manufacturer of watches , is considering the selection of one of two Mutually exclusive investment projects , each with an Estimated five - year life . Project A Costs $ 1, 615, 000 and is forecast to generate annual cash flows of $500,000 . It's Estimated residual value after five* years is $301 , 000 . Project B, costing $5 5,5, 000 and with a scrap value of $56, 000 should generate* annual cash flows of $200,000 . The company operates a straight - line depreciation policy and discounts cash flows at 15 PET! I' cent per annum . ABC It'd, uses FOUR investment appraisal techniques which are payback period , net present value , internal rate of return and accounting rate of return ( i.E . average accounting profit to initial book value of investment ). Compute the appropriate calculations under the FOUR investment techniques Stated above and FIVE REASONS for Your investment advice