A [60 MARKS] Answer ALL the questions in this section. Question One (20 Marks) You recently accepted an assignment with Esprit Limited as a financial consultant. One of your first assignment is the analysis of two proposed capital investment projects. Details of initial investments, after-tax cash flows and average annual profits are represented below: DESCRIPTION YEAR AFTER TAX CASH FLOWS PROJECT A PROJECT B R R Initial Investment -100 000 -100 000 Cash Flows 1 30 000 25 000 2 35 000 25 000 3 28 000 25 000 4 15 000 25 000 Average Annual Profits 14 000 17 000 1.1.1 Which project has a shorter payback period? Motivate your answer by doing the relevant calculations. (8 marks) (answers expressed in years, months and days). 1.1.2 Calculate the accounting rate of return for project B. (4 marks) (answer expressed to two decimal places). 1.1.3 Name two disadvantages of using payback period as a technique to evaluate capital investment decisions. (2 marks) 1.2. A machine with a purchase price of R140 000 is estimated to have an inflow of R40 000 per year. The machine will last 5 years and have no residual value at the end of its life. Required Calculate the internal rate of return. (6 marks)