Sutton Pty Ltd is considering an investment project with an initial outlay of $110 000. Listed below

Question:

Sutton Pty Ltd is considering an investment project with an initial outlay of $110 000. Listed below are the estimated cash flows relevant to the project. The cash flows are equal to net profit before deducting depreciation. Sutton Pty Ltd's is 14%. Depreciation is calculated on a straight-line basis. The project has a of $10 000 at the end of its useful life of four years.

Required:
a) Calculate the accounting rate of return. (Ignore tax)
b) Calculate the net present value. (Ignore tax)
c) Which is the better measure by which to evaluate the proposed project? Explain.
Additional information

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