In order to improve its liquidity position Anchors Investors Ltd is considering investing in two projects; Project P and Project Q with initial investments of $$2,000,000$ and $$4,000,000$ respectively. Each project is expected to have a life of five $(5)$ years. The opportunity cost is $12\%$ and the profits generated by the projects are as follows:

After tax and depreciation profits

Year Project P Project Q

$1500,0001,200,000$

$2500,000700,000$

$3500,000800,000$

$4800,0001,200,000$

$5500,000900,000$

Discount factor table

Year $10\%12\%14\%$

$10\mathrm{.}90910\mathrm{.}89290\mathrm{.}8772$

$20\mathrm{.}82640\mathrm{.}79710\mathrm{.}7695$

$30\mathrm{.}75130\mathrm{.}71180\mathrm{.}6750$

$40\mathrm{.}63800\mathrm{.}63550\mathrm{.}5921$

$50\mathrm{.}62090\mathrm{.}56740\mathrm{.}5194$

Required:

$($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.