quinton corpiration rate of return net present value payback period

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UESTION THREE Management of QC Limited is considering two mutually exci he useful life of both projects is three years and there is ach investment. The following dala is available for each proje ally exclusive Investment projects. there is no salvage value at the end of Cost of Plant & Equipment Expected Profit (Loss) Year 1 FOMU LOSS Year 1 Expected Profit (Loss) Year 2 Expected Profit/(Loss) Year 3 Project Alpha (K) 270 000 270,000 75 000 7 5.000 (52.500) (52,500) 6 7.500 Project Omega 180.000 2 2 31.500 44 250 d of depreciation for all fixed assets. The Quinton Corporation uses a straight-line method of depreciation for a ated cost of capital is 10% per annum Hint Depreciation must be added back to Mons to arrive at cash flows and the company's accounting Target rate is 3070 Required: a) Calculate for each project (1) The Accounting Rate of Return (ii) The Payback Period (iii) The Net Present Value (12 marks) bCompare your results in (a) above, and advise the company on which of the tw projects to undertake. Your advice should explain why you regard your choice as th best (2 marks) e) Critically compare the models used in (a) above and explain which model you regat as the most useful for project appraisal (6 marks) Total (20 marks)