5. A choice is to be made between two competing projects which require an equal investment of 50,000 and are expected to generate net cash flows () as under: Year 1 Year II Year III Year V Year VI Year IV 25,000 15,000 10,000 Nil 12,000 6,000 PROJECT 1 10,000 12,000 18,000 25,000 8,000 4,000 PROJECT 2 Present value factor@10% 0.909 0.826 0.751 0.683 0.621 0.564 The cost of capital of the company is 10%. Which project should be selected and why? Evaluate the project proposals using the following methods pointing out their merits and demerits: a. Pay back Period b. Net Present value method