Three new customer information system projects are proposed to a supermarket chain company. Project a will cost $500, 000 to implement and is expected to have annual net cash inflows of $150,000. Project B will cost $300,000 to implement and should generate annual net cash flows of $104,000. While Project C will cost $400,000 to implement with an annual cash flow of $80,000.00.

a. Calculate the payback period for each project. State which project would be selected given this method. [( 2* 3) + 1 =7 Marks]

b. If the average annual profit for Project A, B and C are $100,000, $70,000 and $55,000 respectively. Calculate the average rate of return for each. State which project would be selected. [(2 * 3) + 1 = 7 Marks]

c. A four year financial project has net cash flows of $30,000, $35,000, $40,000 and $50,000 in the next four years. It will cost $95,000 to implement the project. If the required rate of return is 0.3, conduct a discounted cash flow calculation to determine the NPV and determine what should be done with the project. [ 9 + 1=10 Marks]