Laboo Sdn. Bhd. is planning to make an investment of RM500,000 in one of the two (2) alternative projects in Terengganu. The companys cost of capital is 15% and the expected cash flows from both projects are as follows: Year Project A (RM) Project B (RM) 1 120,000 150,000 2 100,000 150,000 3 130,000 150,000 4 150,000 150,000 5 180,000 150,000

(a)You are required to calculate:

i) payback period for both projects.

ii) net present value for both projects.

iii) internal rate of return for project B. ( 16 marks )

(b)Based on your answer in (a) above, which project should be selected? Explain your answer. ( 4 marks )