arragon needs to choose between two mutually exclusive investment projects, each lasting for five years. The company uses straight-line method of depreciation and its cost of capital is 15 per cent.

Project Alpha would generate annual cash inflows of 200,000 after the purchase of machinery costing 556,000, with a scrap value after five years of 56,000.

Project Beta would generate annual cash inflows of 500,000 after the purchase of machinery costing 1,616,000, with a scrap value after five years of 301,000.

Required: Calculate, for each project, the return on capital employed (ROCE), net present value, and payback period. Advise which project should be undertaken based upon the results calculated.