LIVIAL LU MANNS Questions The directors of Zhang Limited are considering three alternative investment proposals, details of which are as follows. Project Arjun Project Bharat Project Charu E E Initial investment 125,000 200.000 Nel cash inflows year 1 100,000 25,000 25,000 35 000 35 000 Net cash intons vear 2 B0 000 60.000 80.000 25,000 35 000 Nct cash inflows ycar 3 35.000 30,000 Nel cash in lows year 4 Net cash inflows year 5 25,000 25,000 35.000 30,000 The company depreciates its assets on a straight line basis, assuming a life of five years with no residual value at the end of that time. Required: a) Using the above information, for each of the projects Arjun and Bharat and Charu, Calculate 1. The Payback Period 2 The Accounting Rate of Return 3 The Net Present Value using a discount rate of 10% Note: Extract of Prosent Value Tables are on page 12 (14 marks) b) Statc, with reasons which ONE of the two investment projects the dircctors of Kish Limited should accept 18 marks) d) Discuss why the Net Present Value method of investment appraisal is considered to be theoretically superior to other methods that are found in practice 16 marks) (TOTAL 25 MARKS)