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(14 MARKS QUESTION 2 Abu Ilyas Engineering is considering including two pieces of equipment, a ROBOTIC ARMS and a CONVEYOR BELT system, in this year's capital budget. The projects are independent The initial cash outlay for the ROBOTIC ARMS is SR22,000 and that for the CONVEYOR BELT system is SR22,430. The firm's REQUIRED RATE OF RETURN is 19%. The company has set its maximum pay-back-period cut off to be 3 years. After-tax free cash flows are as follows: Year ROBOTIC ARMS CONVEYOR BELT SR22,000 SR22,430 1 SR8,780 SR8,500 2 SR6,540 SR8,680 3 SR8,700 SR7,500 4 SR9,500 SR6,500 Calculate: 0 (2 marks) A) Payback Period for CONVEYOR BELT ONLY B) Net Present Value for ROBOTIC ARMS PROJECT ONLY (3 marks Profitability Index for both ROBOTIC ARMS PROJECT and CONVEYOR BELT Droit (2 mark) D) Write the summary of your calculations above in the shaded area of the tables below for each of the project and their decision. (5 marks) ROBOTIC ARMS Project Decision Project's Value 3.09 years Method Payback Period Ner Present Value Profitability Index IRR Comparison 3 years 0 REJECT 1 19.34% 19% CONVEYOR BELT Project Method Project's Value Decision years $1,465.67 Comparison 3 years 0 REJECT Payback Period Net Present Value Profitability Index IRR 1 15.40% 19% E) If the projects are mutually exclusive, which project to be accepted and why? (2 marks)

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