Question 1 Grey Ltd has provided the following figures for two investment projects, only one of which may be chosen. Initial outlay Project X Project Y 200,000 180,000 Profit for year 1 65,000 35,000 2 65,000 35,000 3 75,000 65,000 4 35,000 85,000 Estimated resale value at end of year 4 60,000 40,000 Profit is calculated after deducting straight line depreciation. The business has a cost of capital of 10%. Required a) Calculate for each project i. Payback ii. iii. Average Return on Capital Employed Net present value (NPV) b) Critically discuss the merits and limitations of payback and NPV (Your answer is to be presented in an essay format NOT Bullet Points) (25 marks) (25 marks)