For revision purpose

Newland Company is considering investing in one of two projects - A or B. The initial cost and net cash inflows from each project are shown below. The discount rate for both projects is 18% per cent.

Cash Flow	Project A	Project B
	$	$
Initial Cost	3,000,000	3,500,000
Net Cash Inflows
Year 1	800,000	1,000,000
Year 2	800,000	1,000,000
Year 3	1,200,000	700,000
Year 4	1,200,000	800,000
Year 5	1,200,000	800,000

Discount factors for the projects @18% per annum are as follows:

Year	Factor
1	0.8475
2	0.7182
3	0.6086
4	0.5158
5	0.4371

Required (prepare in excel where applicable):

a). Calculate the payback period for each project and identify the project in which the company should invest, giving ONE reason for your choice.

b). Calculate the Accounting Rate of Return on initial capital for each project.

c). Calculate the Accounting Rate of Return on average capital for each project.

d). Calculate the net present value (NPV) for each project and identify the project in which the company should invest, giving ONE reason for your choice.