Section C - Question 4: The directors of Rana Ltd are considering two capital investment opportunities, which will require the purchase of new machinery, but only have the finance for one of them. The details relating to the investment projects are as follows: Initial cost of machine Project A 100,000 Project B 120,000 Both projects are estimated to last for four years and the estimated disposal/residual values of the machines are as follows: Residual asset value Project A 6,000 Project B 8,000 The estimated cash inflows are summarised as follows: Years Project A Year 1 20,000 Year 2 25,000 Year 3 30,000 Year 4 40,000 Project B 35,000 35,000 35,000 35,000 Cost of capital is estimated at 6%. Required: For both projects, using the information given, calculate: a) The Payback Period. (3 marks) b) The Accounting Rate of Return (ARR) (6 marks) c) The Net Present Value (NPV). (6 marks) d) State which project you would recommend and explain the reasons for your choice based on the strengths and weaknesses of each of the three methods of investment appraisal