Island Enterprises has the option to invest in machinery in projects A and B but finance is only available to invest in one of them. You are given the following projected data:

Project A $($R$)$

Project B $($R$)$

Initial cost

$450000$

$450000$

Net profit:

Year $1$

$36000$

$69000$

Year $2$

$75000$

$69000$

Year $3$

$102000$

$69000$

Year $4$

$129000$

$69000$

Year $5$

$81000$

$69000$

Additional information

$1.$

All cash flows take place at the end of the year except the original investment in the project which takes place at the beginning of the project.

$2.$

Project A machinery will be disposed of at the end of year $5$ with a scrap value of R$60000.$

$3.$

Project B machinery will be disposed of at the end of the year with a nil scrap value.

$4.$

Depreciation is calculated on a straight$-$line basis.

$5.$

The discount rate to be used by the company is $12\%.$