Question 3 (a) Adam is planning to decide between three new shop houses with different location to run his business. The required rate of return for finance this project is 8 percent. These projects are mutually exclusive and the cash flows from the investment are at follow: Shah Alam 8,000,000 Alor Setar 5,000,000 Batu Pahat 6,500,000 Initial Outlay (RM) Year Expected Cash flow (RM) RM2,500,000 RM1,500,000 1 RM2,000,000 2 RM3,000,000 RM1,800,000 RM2,000,000 3 RM2,800,000 RM2,000,000 RM2,000,000 4 RM2,700,000 RM2,200,000 RM2,000,000 5 RM4,000,000 RM2,500,000 RM2,000,000 Calculate the following for each location: i. Payback period. (6 marks) ii. (9 marks) Net present value. iii. Profitability index. (b) Based on the answer in (a), which project should be selected and justify the reasons. [25 Mark (6 marks) (4 marks)