Consider the following information about four different projects. Each requires an initial outlay of Rs $\backslash (1,000,000\backslash )$ but the firm only has funds to undertake one project. The firm has traditionally used a discount rate of $\backslash (10\backslash \%\backslash )$ to evaluate all its projects. The information regarding four projects are as follows:

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline & $\backslash$begin$\{$tabular$\}\{$l$\}$

Project $\backslash \backslash$

'Attract'

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Project $\backslash \backslash$

'Boring'

$\backslash$end$\{$tabular$\}$ & $\backslash$begin$\{$tabular$\}\{$l$\}$

Project $\backslash \backslash$

'Cool'

$\backslash$end$\{$tabular$\}$ & Project 'Dear' $\backslash \backslash$

$\backslash$hline Cash flows & Rs$\text{'}000$ & Rs$\text{'}000$ & Rs$\text{'}000$ & Rs$\text{'}000\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{5\}\{|$l$|\}\{$Year$\}\backslash \backslash$

$\backslash$hline $1$ & & $160$ & $1,200$ & $(350)\backslash \backslash$

$\backslash$hline $2$ & & $200$ & $900$ & $(60)\backslash \backslash$

$\backslash$hline $3$ & & $350$ & $300$ & $60\backslash \backslash$

$\backslash$hline $4$ & & $395$ & $90$ & $350\backslash \backslash$

$\backslash$hline $5$ & & $432$ & $70$ & $700\backslash \backslash$

$\backslash$hline $6$ & & $440$ & & $1,200\backslash \backslash$

$\backslash$hline $7$ & & $442$ & & $2,250\backslash \backslash$

$\backslash$hline $8$ & & $444$ & & $\backslash \backslash$

$\backslash$hline $9$ & & $446$ & & $\backslash \backslash$

$\backslash$hline $10$ & & $448$ & & $\backslash \backslash$

$\backslash$hline $11$ & & $450$ & & $\backslash \backslash$

$\backslash$hline $12$ & & $451$ & & $\backslash \backslash$

$\backslash$hline $13$ & & $451$ & & $\backslash \backslash$

$\backslash$hline $14$ & & $452$ & & $\backslash \backslash$

$\backslash$hline $15$ & $10,000$ & $\backslash ((2,000)\backslash )$ & & $\backslash \backslash$

$\backslash$hline & & & & $\backslash \backslash$

$\backslash$hline Performance indicators: & $\backslash$begin$\{$tabular$\}\{$l$\}$

Project $\backslash \backslash$

'Attract'

$\backslash$end$\{$tabular$\}$ & Project 'Boring' & Project 'Cool' & Project 'Dear' $\backslash \backslash$

$\backslash$hline NPV RS$\text{'}000$ & $393\mathrm{.}92$ & $228\mathrm{.}22$ & $165\mathrm{.}04$ & $182\mathrm{.}98\backslash \backslash$

$\backslash$hline ROI $($or IRR$)\backslash \%$ & $11\mathrm{.}3\backslash \%$ & $12\mathrm{.}3\backslash \%$ & $15\mathrm{.}3\backslash \%$ & $11\mathrm{.}4\backslash \%\backslash \backslash$

$\backslash$hline Payback period $($ number of years required for the project's future cash flows to recover its investment $($years$)$ & $14\mathrm{.}20$ & $6\mathrm{.}05$ & $1\mathrm{.}89$ & $6\mathrm{.}04\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

Required:

$($a$)$ Explain with supporting reasons whether a blanket discount rate of $\backslash (10\backslash \%\backslash )$ used to evaluate all four projects is a sound financial management practice.

$[5$ marks$]$

$($b$)$ Explain, with supporting reasons $($no computations are required$),$ which project would have the greatest shareholder value added.