QUESTION IS BELOW

Question 1 W WBoat Services, is considering the purchase of a new boat to add to its existing eet of tourist boats to Langkawi Island. Three possible alternatives are being considered and estimated cash ows from the two different choices are as follows: The fo1lowrng data is available for each boat. Boat 1 Boat 2 m RM Cost (immediate 350,000 950,000 outlay) Investment in working 50,0 00 50,000 capital and the amount will he recovered at the end of the year project Estimated disposal 50,0 00 50,000 value of machine Expected cash inow Year RM RM 1 133,000 522,000 2 133,000 422,000 3 133,000 322,000 4 133,000 222,000 5 383 000 72 000 Expected cash outflow RM RM Annual running cost 15 ,0 00 12,000 Annn nl service cost 18,0 00 10,000 The committee has estimated a cost ofcapital of20%. The followmg discount factors are also given: (a) (1!) Determine for both boats the: (i) Payback Period (ii) Net Present Value (NPV) (iii)Interna.t Rate of Return (ERR) (iv)Aocounting Rate of Return (ARR) Advice management which boat should be invested and give your reasons. Year Cost of Capital Cost of Capital 20% 28% 1 0.833 0.781 2 0.694 0.610 3 0.579 0.477 4 0.482 0.373 5 0.402 0.291 Required