Pantone Bhd invested in two projects, project Gamma and project kappa. The projects are independent of...

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Pantone Bhd invested in two projects, project Gamma and project kappa. The projects are independent of each other. The following schedule shows the cash flows for each project. Year 0 1 2 3 4 5 Year 0 1 2 The following schedule shows the profit for each project. Project Gamma RM 0 RM 12,000 RM 12,000 RM 12,000 RM 12,000 RM 12,000 3 4 5 Project Gamma - RM 60,000 The discount rate is 10%. RM 25,000 RM 20,000 RM 15,000 RM 10,000 RM 10,000 Project Kappa - RM 60,000 RM 10,000 RM 20,000 RM 20,000 RM 25,000 RM 5,000 Project Kappa RM 0 RM 5,000 RM 10,000 RM 10,000 RM 15,000 RM 20,000 Required: A. Appraise the projects using the Accounting Rate of Return. B. Appraise the projects using the Payback Period. C. Appraise the projects using the Net Present Value. D. If the projects are mutually exclusive, which project should Prominent Sdn Bhd invest in? E. Explain your recommendation with reference to the above appraisal methods. F. If the projects are independent, which project should Prominent Sdn Bhd invest in? Explain your recommendation with reference to the above appraisal methods. Note: State all relevant formulas in your appraisal Pantone Bhd invested in two projects, project Gamma and project kappa. The projects are independent of each other. The following schedule shows the cash flows for each project. Year 0 1 2 3 4 5 Year 0 1 2 The following schedule shows the profit for each project. Project Gamma RM 0 RM 12,000 RM 12,000 RM 12,000 RM 12,000 RM 12,000 3 4 5 Project Gamma - RM 60,000 The discount rate is 10%. RM 25,000 RM 20,000 RM 15,000 RM 10,000 RM 10,000 Project Kappa - RM 60,000 RM 10,000 RM 20,000 RM 20,000 RM 25,000 RM 5,000 Project Kappa RM 0 RM 5,000 RM 10,000 RM 10,000 RM 15,000 RM 20,000 Required: A. Appraise the projects using the Accounting Rate of Return. B. Appraise the projects using the Payback Period. C. Appraise the projects using the Net Present Value. D. If the projects are mutually exclusive, which project should Prominent Sdn Bhd invest in? E. Explain your recommendation with reference to the above appraisal methods. F. If the projects are independent, which project should Prominent Sdn Bhd invest in? Explain your recommendation with reference to the above appraisal methods. Note: State all relevant formulas in your appraisal

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SOLUTION A Accounting Rate of Return ARR The Accounting Rate of Return is calculated by dividing the average annual profit by the average investment a... View the full answer