An investor has a choice between two projects (Project A and Project B). Project A Project A requires the investment of $400,000 on 1 January 2020 and $200,000 on 1 April 2020. The project starts earning income from 1 July 2020. The income will be paid monthly in advance at an initial rate of $120,000 per annum. The income will decrease by $5,000 every year on 1 July and will cease at the end of 2030. Project B Project B requires the investment of $600,000 on 1 January 2020. The project immediately starts earning income. The income will be received quarterly in arrears at an initial rate of $85,000. The income will increase at a compound rate of 4% per annum every four years with the first increase taking place on 1 January 2024 and will cease at the end of 2030.

(i) Construct a monthly cashflow schedule for Project A.

(ii) Construct a quarterly cashflow schedule for Project B.

(iii) Calculate the internal rate of return from both Project A and Project B.

(iv) Using a rate of interest of 8% per annum effective, calculate, for both Project A and Project B, (a) the net present value

(b) the payback period

(c) the discount payback period

(v) Discuss the suitability of internal rate of return, net present value, payback period and discounted payback period for assessing an investment project.