Sutton Pty Ltd is considering an investment project with an initial outlay of $110 000. Listed below are the estimated cash flows relevant to the project. The cash flows are equal to net profit before deducting depreciation. Sutton Pty Ltd's cost of capital is 14%. Depreciation is calculated on a straight-line basis. The project has a salvage value of $10 000 at the end of its useful life of four years.

Required:
a) Calculate the accounting rate of return. (Ignore tax)
b) Calculate the net present value. (Ignore tax)
c) Which is the better measure by which to evaluate the proposed project? Explain.
Additional information

2013 201420152016 Estimated cash flows 35 000 50 000 60 000 35 000 Present Value of S1.00 12% 0.893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 Periods 16% 0.862 0.743 0.641 0.552 0.476 Present Value of a series of S1.00 cash flows 14% 0.877 1.647 2.322 2.914 3.433 Periods 12% 0.893 1.690 2.402 3.037 3.605 16% 0.862 1.605 2.246 2.798 3.274