A company is considering two mutually exclusive projects requiring an initial cash outlay of Sh 10,000 each and with a useful life of 5 years. The company required rate of return is 10% and the appropriate corporate tax rate is 50%. The projects will be depreciated on a straight line basis. The before depreciation and taxes cashflows expected to be generated by the projects are as follows. YEAR Project A Shs 4,000 Project B Shs 6,000 1 O Required: Calculate for each project i. The payback period 2 4,000 3,000 3 4,000 2,000 ii. The average rate of return iii. The net present value iv. Profitability index v. The internal rate of return vi. Using NPV which project should be accepted? 4 4,000 5,000 5 4,000 5,000 (3 Marks) (3 Marks) (5 Marks) (3 Marks) (4 Marks) (2 Marks)