IMPORTANT PLEASE ...........................

(c ) Suppose Duke Limited has the following independent projects to consider for investment as shown in the table below. At the end of Year 0 1 2 3 4 5 6 Project (800) 200 200 200 200 200 200 Cash flow (RM million) Project Y (800) 300 300 300 300 Project Z (800) 400 400 400 The overall cost of capital of Duke Limited is 10%. However, the management perceives that Project Z is riskier than other projects and thus requires an additional 2% return on the investment in Project Z. Based on the information given, you are required to (i) (ii) Determine the net present value (NPV) of each project. (9 marks) Based on the answers in part (i), decide and explain which project, if any, is acceptable for investment. (3 marks) (iii) Justify carefully whether NPV is an appropriate method for the accept/reject decision on independent projects with unequal lives. (4 marks)