A.The Black Package Group is thinking of buying, at a cost of $100,000, some new packaging equipment that is expected to generate $50,000 per year. Its estimated useful life is 5 years and it will have $5,000 as a disposal value. The required rate of return is 16%. Compute the net present value and payback period for this investment.

(5 marks)

B.An NPV analysis of an investment project shows that the project will generate +$3,600 based on a required rate of return of 10%. What does this mean?

(3 marks)

C.BCG Group, a top business consulting firm in East Asia, is considering four proposals for a new database system. After careful analysis, the company's accountant has developed the following information about the four proposals:

Proposal 1 Proposal 2 Proposal 3 Proposal 4 Payback period 4 years 4.5 years 6 years 7 years Net present value RM80,000 RM178,000 RM166,000 RM308,000 Accounting rate 8% 6% 4% 7% of return