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ABC Ltd is wondering whether or not to invest in one of two(2) possible projects. The initial investment will be $10,000, and the cost of

ABC Ltd is wondering whether or not to invest in one of two(2) possible projects. The initial investment will be $10,000, and the cost of capital is 10 per cent. There is no scrap value for fixed assets used. Details of the net cash inflows are as follows: Project N P Year Net Cash Flows Net Cash Flows 0 (10000) (10000) 1 5000 4000 2 5000 5:000 3 2000 3.000 4 1600 1000 5 1400 Required: Calculate for the two projects the : i.) Payback period marks] [4 ii.) Accounting rate of return( assuming the cash flows represent profits) iii.) Net Present [4 marks] Value marks] [6 iv.) Internal Rate of Return. [6 marks] v.) Recommend which of the project to accept by the firm base on your assessment. marks] [5

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