Question 3 (15 marks)

X construction is considering two projects to develop. The estimated net cash flow from each project is

as follows:

Year	Project X ($)	Project Y ($)
1	110,000	75,000
2	65,000	150,000
3	100,000	60,000
4	115,000	55,000
5	35,000	60,000
Total	425,000	400,000

Each project requires an investment of $ 200,000.

The cost of capital is 10%.

Require to

1. Calculate Net Present Value, Payback period, ARR and Profitability Index.
2. Which Project is to be recommended to develop based on NPV, Profitability Index, Payback period and ARR? Suggest