Question: 1) Consider the following two mutually exclusive projects I and II: Year Cash Flow (I) Cash Flow (II) 0 -$64,000 -$18,000 1 31,000 9,700 2

1) Consider the following two mutually exclusive projects I and II:

Year	Cash Flow (I)	Cash Flow (II)
0	-$64,000	-$18,000
1	31,000	9,700
2	31,000	9,700
3	31,000	9,700

Whichever project you choose, if any, you require a 15% return on your investment. If you apply the payback criterion, which invest will you choose? If you apply the discounted payback criterion, which investment will you choose?

2) In real life, how would you compare two firms' performance?

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