1)  Anoma Inc. is considering two mutually exclusive projects. Each requires an initial investment of $100,000. John Shell, president of the company, has set a maximum payback period of 4 years. The after-tax cash inflows associated with each project are shown in the following table:

Year	Cash inflow of Project A	Cash inflow of Project B
1	$ 10,000	$ 40,000
2	20,000	30,000
3	30,000	20,000
4	40,000	10,000
5	20,000	20,000

a. Determine the payback period of each project.

b. Because they are mutually exclusive, Shell must choose one. Which should the company invest in?

c. Explain why one of the projects is a better choice than the other.

2) Neil Corporation has three projects under consideration. The cash flows for each project are shown in the following table. The firm has a 16% cost of capital.

	Project A	Project B	Project C
Initial Investment	$40,000	$ 40,000	$ 40,000
Year	Cash inflows ($)
1	13,000	7,000	19,000
2	13,000	10,000	16,000
3	13,000	13,000	13,000
4	13,000	16,000	10,000
5	13,000	19,000	7,000

a. Calculate each project’s payback period. Which project is preferred according to this method?

b. Calculate each project’s net present value (NPV). Which project is preferred according to this method?

c. Comment on your findings in parts a and b, and recommend the best project. Explain your recommendation.