ZyadaPaisa Limited has 1,600,000 to invest. The company is considering a few investment projects but only has sufficient cash to accept one of them. The projected cash flows of the most likely (project Solar) are shown below. The directors have asked for your help and advice in reaching a decision on whether to accept this project. The company requires that investments are required to achieve a minimum target of Accounting Rate of Return (ARR) of 18.0% and a maximum acceptable Payback period of 4 years. The companys cost of capital is 9%.

Project Solar Cash flows 000 Initial investment (1600) Cash inflows year 1 300 Cash inflows year 2 500 Cash inflows year 3 600 Cash inflows year 4 480 Cash inflows year 5 400 Cash inflow from sale of the investment at the end of year 5 300 7. Using the information above, what is the Payback period for project Solar (Calculate to the nearest whole month)? A) 2 years 10 months. B) 3 years 4 months. C) 3 years 5 months. D) 4 years. 8. Using the information above, what is the Accounting Rate of Return for project Solar? (calculate to the nearest 1 decimal place)? A) 20.6% B) 48.0% C) 18.0% D) 30.2% 9. Using the information above, what is the Net Present Value for project Solar? A) +354.1 B) +159.0 C) -354.1 D) +259.0