QUESTION 3 A business owner has a choice of 2 investment projects. The estimated costs and returns are as follows: Project A (RM) Project B (RM) Cost 400,000 320,000 25,000 Year 1 cash flow Year 2 cash flow Year 3 cash flow (20,000) 270,000 190,000 360,000 315,000 (a) Calculate the NPV for Project A and Project B using a discount factor of 16% as given in the following table. Year 16% discount factor 1 0.862 2 N 0.743 3 0.641 (b) ( At a discount factor of 18%, the NPV of Project A is negative RM3,840. Using this information and your answer to part (a), estimate the IRR. (C) c For projects A and B above, repair and maintenance costs are expected to average RM15,000 per annum for Project A and RM20,000 for Project B. Use the ARR method of investment appraisal to advise the business owner on which project is the better investment