XYZ Limited is evaluating two projects, Project A and Project B, each requiring an initial investment of $200,000. The cash flows and profits are as follows:

Year	Project A Cash Flow	Project A Profit	Project B Cash Flow	Project B Profit
1	$50,000	$10,000	$60,000	$12,000
2	$60,000	$15,000	$70,000	$14,000
3	$70,000	$20,000	$80,000	$16,000
4	$80,000	$25,000	$90,000	$18,000

• Cost of Capital: 10%

Requirements: a) Discuss the concept of relevant costs in project appraisal. b) Compare and contrast the payback period and the accounting rate of return (ARR). c) Calculate for both projects: i) The payback period. ii) The net present value (NPV). iii) Recommend which project XYZ Limited should undertake and justify your choice.