QUESTION $5(20$ MARKS$)$

Annur Sdn Bhd are evaluating the data for two projects as follows:

Project A

$($RM$)$

Project B

$($RM$)$

Initial Investment $42,00045,000$

Year Operating Cash Inflow

$114,00028,000$

$214,00012,000$

$314,00010,000$

$414,00010,000$

$514,00010,000$

For each project, calculate the following capital budgeting techniques:

$($a$)$ Accounting Rate of Return $($Assume salvage value $=0)$

$(4$ marks$)$

$($b$)$ Payback Period

$(2$ marks$)$

$($c$)$ Net Present Value $($Use cost of capital $=10$ percent$)$

$(10$ marks$)$

$($d$)$ Profitability Index $($Use the same cost of capital in $($c$)$ above$)$

$(4$ marks$)$