1. You are considering two mutually exclusive projects: projects A and project B. The initial cash outlay (cost) associated with project A is $60,000, whereas the initial cash outlay associated with project B is $ 80,000. The required rate of return on both projects is 10 percent. The expected annual free cash inflows from each project are as follows:

Year	Project A	Project B
0	- 60,000	-80,000
1	13,000	15,000
2	13,000	15,000
3	13,000	15,000
4	13,000	15,000
5	13,000	15,000
6	13,000	15,000

A. Calculate the payback period. Which project should be accepted under the payback rule?

B. Calculate the NPV and the IRR for each project and; (i) indicate which project should be accepted, if mutually exclusive; (ii) Explain in detail why you selected or rejected the project/s; (iii). What are the implications for the firm if you selected the wrong project?