Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company's required rate of return for all investment projects is 99. The cash flows of the projects are provided below.

Project 1 $175,000

76,000 83,000

57.000 65,000 55,000

Cost

Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5

Required:

a)Project 2 $185.000

87.000 78,000 69,000 65,000 57,000

Identify which project should the company accept based on NPV method. (4 marks) (Note: Please round up the result of each colculation of PV to 2 decimal places only for simplification)

b) identify which project should the company accept based on simple pay back method if the payback criterion is maximum 2 years.

c) Which project Giant Machinery should choose if two methods are in conflict.