JK Manufacturing is considering investing in either of two competing projects that will allow the firm to reduce a production bottleneck problem and meet the growing demand for its products. The firms CFO developed the following estimates of the cash flows for project X and project Y over the relevant 6-year time horizon. The firm has a 10% required return and views these projects as equally risky.

Initial outflow Year 1 Project X Project Y (RM) (RM) (50,000) Cash inflows 12,000 15,000 12,000 8,000 12,000 10,000 12,000 12,000 12,000 14,000 12,000 16,000 2 3 4 5 6 Calculate the followings: i) Net Present Value for each project. (6 marks) ii) Internal rate of return for each project. (8 marks) Profitability index for each asset. (4 marks) Compare and contrast your findings in i), ii) and iii). Assuming that both projects are mutually exclusive, which project would you recommend to JK Manufacturing? Why? (2 marks) [Total 20 Marks]