What is capital budgeting? Mention some common capital budgeting techniques.

ABO Enterprise is reviewing an investment proposal. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. The residual value of the investment at the end of each year is equal to its book value. There would be no residual value at the end of the investment's life.

Investment proposal

ABO Enterprise uses a 15% target rate of return for new investment proposals. Discount factors are as follows :

You are required calculate :
(i) Cash payback period for this proposal.
(ii) The Annual Rate of Return (ARR) for the investment.
(iii) The Net Present Value (NPV) of the investment.