The directors of Mighty River Limited are considering two mutually exclusive investment projects relating with the purchase of a new plant. The accountant has provided you with the information pertaining to the two projects. Project Project II Initial cash outlay $5 million $4.5 million Expected annual net profit/(loss): Year 1 $2 million 2 ($1 million) 3 $2 million $3 million $2.5 million ($1.5 million) Estimated residual value at the end of year 3 $500,000 Nil You are to use the straight-line depreciation method for the projects (where applicable). Required: Which of the two projects would you choose based on the Accounting rate of return (ARR), Payback and the Net Present Value (NPV)? The discount rate is 14%. Show all workings and justify your answer. (10 marks)