The following information relates to two possible capital projects, one of which you should choose to invest in. Both projects have an initial capital cost of $210,000 and only one can be undertaken.

Projects	X	Y
Expected profits	$	$
Year 1	85.000	35.000
2 years	70.000	50.000
3 years	40.000	90.000
4 years	20.000	120.000
Estimated resale value at the end of year 4	40.000	40.000

Note: Profit is calculated after deducting straight-line depreciation.

Cost of capital 16%

Year	1	2	3	4
%16	0,862	0,743	0,641	0,553

Necessary:

a) Calculate the following for both projects:

(i) Payback period to one decimal place.

(ii) Accounting rate of return using the average investment

(iii) Net present value

b) Inform the board which project should be undertaken, giving the reasons for your decision.