Question: QUESTION 2 (25 Marks) 3. A project requires an initial investment of RM225,000 and is expected to generate the following net cash inflows: Year 1

QUESTION 2 (25 Marks)

3. A project requires an initial investment of RM225,000 and is expected to generate the following net cash inflows:

Year

1

2

3

4

Cash inflows

RM95,000

RM80,000

RM60,000

RM55,000

a) Compute net present value (NPV) of the project if the minimum desired rate of return is 12%.

(15 marks)

b) Calculate the accounting rate of return (ARR) of the project assuming the minimum desired rate of return is 12%.

(10 marks)

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