ABC Limited is considering two investments which are mutually exclusive. The initial investment for each project is $$40,000.$ The expected cash inflows for project A is $ $12,500$ annually for the next five years. Further, project A requiressome major upgrade in year three, expected to cost $ $6,000.$ The expected cash

inflows for project B are $10,800,14,200,16,400$ and $15,800$ in year two through

year five. You have been requested to evaluate the projects and make

recommendations as to which one is most preferable based on different

investment evaluation criteria. The company$$s cost of capital is $10\%$

Required

i Payback period $(5$ marks$)$

ii Net present value $(5$ marks$)$

iii Profitability $(5$ marks$)$

iv Internal rate of return $(5$ marks$)$