Seminar Questions on Investment Decisions The management team of the Arabian Golf Limited have four projects for consideration. In the past, they have evaluated projects against simple payback. The following information is available: Project A Project B Project C Project D SAR SAR SAR SAR Capital outlay 65,000 140,000 30,000 160,000 Net cash inflows: Year 1 30,000 45,000 20,000 35,000 Year 2 20,000 45,000 10,000 35,000 Year 3 15,000 45,000 10,000 55,000 Year 4 10,000 45,000 55,000 Year 5 10,000 45,000 65,000 REQUIRED 1. Evaluate the projects using each of the following methods: a. Simple payback. b. Accounting rate of return. c. Net present value and profitability index. Assuming a cost of capital of 6%. d. Internal rate of return for the project with the best profitability index. 2. Write a report to the Chairperson of the management team explaining each of the evaluation methods. You are also required to make a recommendation on the method(s) which should be used by the company for future project evaluation.