b) Your company has the option to invest in projects and R but finance is only available to invest in one of them. You are given the following projected data Project T R Ghe Ghe Initial Cost 70,000.00 60.000,00 Profits: Year 1 15,000.00 20.000,00 Year 2 18,000.00 25.000.00 Year 20,000.00 (50,000.00) Year 4 32,000.00 10,000.00 Years 18,000.00 3.000,00 Year 6 2.000,00 You are also informed: 1. All cash flows take place at the end of the year apart from the original investment in the project which takes place the beginning of the project. II. Project T machinery is to be disposed of at the end of year 5 with a scrap value of Gh10,000.00 III. Project R machinery is to be disposed of at the end of year 3 with a nil scrap value and replaced with new project machinery that will cost Ghe75,000.00 IV. The cost of this additional machinery has been deducted in arriving at the profit projections for R for year 3. It is projected that it will last for three years and have a nil scrap value. V. The company's policy is to depreciate its assets on a straight line basis. VI. The discount rate to be used by the company is 14%. Required: a) If investment was to be made in project R, determine whether the machinery should be replaced at the end of year 3. (3 marks) b) Calculate for projects T and R, taking into consideration your decision in (a) above I. Payback period II. Net present value and advise which project should be invested in, stating your reasons. (12 marks)