Question 4 Your manager has supplied you with the following data relating to two investment projects, only one of which may be selected: - Project 1 Project 2 _(RM) (RM) Initial capital expenditure 50,000 50,000 Profit (loss): year 1 25,000 10,000 year 2 20,000 10,000 year 3 15,000 14,000 year 4 10,000 26,000 Your manager has also given you some additional information to work with as follows: - Estimated resale value at the end of year 4 for both projects is RM10,000 The above profits are derived after deducting straight-line depreciation The cost of capital is 10% Required: (a) For both the projects, calculate: (i) Average annual rate of return on average capital invested (ARR) (6 marks) (ii) Payback period (4 marks) (iii)Net present value, and give three reasons explaining which project you would recommend for acceptance to your superior. (10 marks) (b) Discuss briefly TWO (2) advantages of the net present value method (5 marks) [Total: 25 Marks)