Indigo Ltd runs a theme park. It is considering three options for expansion, two of which involve existing sections of the park Astro Land and Adventure Land and the third involves the establishment of a new section of the park Lego Land. The company currently has 72% debt in its capital structure. Capital for the project is rationed to $700 000 after which the company will have to raise the rest of the money if needed. The net cash flows for each option are detailed below. The directors work on a 12% required rate of return. Year 3 Project Astro Land Adventure Land Lego Land Year 4 220000 Year o (500000) (480000) (900000) Year 1 85000 80000 0 Year 2 210000 190000 215000 200000 320000 Year 5 210000 170000 440000 190000 280000 400000 You are required to: A. Calculate for each project: (0) ARR (ii) Payback period (iii) NPV B. Discuss 2 benefits and 2 limitations of each of the four investment appraisal methods used. C. Rank the projects and write a report recommending which project or projects you would proceed with and why? D. If a decision is taken to fund projects requiring more than the $700 000 at hand. You are presented with several alternatives: (i) Unsecured business loan with either fixed or variable interest rates from the Commonwealth Bank; (ii) 7% Debentures secured by a charge over assets; (iii) Issue new shares to existing shareholders in the form of a rights issue. Which method would you choose? In your answer refer to current interest rates and consider the level of costs and risk associated with each alternative