QUESTION 4 (20 marks) You are a CFO of an international investment firm based in Kuching, Sarawak. You have been assigned to evaluate and inform the management on three mutually exclusive projects financing which is scheduled to begin next year. Based on the preliminary evaluation, the projected cash flows are summarised in the following table. The cost of borrowing to finance the project is currently at 10%. Cash Flows forecast (RM000) Year 0 1 2 3 4 5 Total inflows Pontianak Project 130,000 50,000 50,000 55,000 63,000 40,000 Brunei Balikpapan Project project 120,000 150,000 42,000 40,000 42,000 48,000 42,000 65,000 42,000 80,000 42,000 70,000 258,000 210,000 303,000 a) Calculate the payback period (PP), the net present value (NPV), the profitability index (PI) and the internal rate of returns for each project. (10 marks) b) Determine the rankings of the three stores based on your findings in (a) and also stating the decision criteria in each method. (5 marks) c) Since it is a mutually exclusive decision, the CEO favors the project with the highest IRR. What do you think the company should do, and why? (You may also suggest your personal insights of the risks that may be associated with the divisions proposed)