Question: ABC Corporation is evaluating two projects, E and F. Project E requires an initial investment of $25,000 and is expected to generate cash flows of

ABC Corporation is evaluating two projects, E and F. Project E requires an initial investment of $25,000 and is expected to generate cash flows of $8,000 in year 1, $10,000 in year 2, $12,000 in year 3, and $14,000 in year 4. Project F requires an initial investment of $22,000 and is expected to generate cash flows of $7,000 in year 1, $9,000 in year 2, $11,000 in year 3, and $12,000 in year 4. Assume a discount rate of 9%.

(a) Calculate the NPV for each project.

(b) Provide your accept/reject decision for each project.

(d) Calculate the payback period for both projects.

(e) Which project would you recommend if they are independent and why?

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