1) If the maximum payback period is allowed is 6 years, use the Payback method to find which project should Paul choose.

2) If the average yearly investment for both Project A and Project B are $10,000, use the Average Rate of Return method to find the project Paul should choose.

3) Use the Net Present Value Method to help Paul make a decision.

4)Use the Benefit /Cost Ratio to help him make a decision.

5) Use the Amortization Method to find which project should be accepted.

(Hint: find the equivalent annual cost (EAC) first, and then find the net benefit and Benefit/Cost ratio)

Q4. Joyce is a new assistant manager in Peace AgBiz. Her boss asked her to evaluate the capital budget opportunities of two potential investments: Project A and Project B. Joyce has not much knowledge about capital budgeting decision procedures, so she asked you for help. Fill out the following table and then answer the following questions. (10 points in total) (Note: please find Present Value Factor from the attached Present Value of $1 table Year After Tax Benefit ($) After Tax Present Value After Tax Ipresent valuel Factor Benefit($) of benefit After Tax Present Value Ipresent valuel Factor of benefit Year 1 Year 2 Year 31 Year 41 Year 51 Year 6 Total $2,000 $2,000 $5,000 $2,000 $6,000 $4,000 $4,000 $5,000 $6,000 $4,000 $1,000 $2,000 Note: The discount/interest rate is 9% and the initial total cost is $15,000