Question: Amiga PLC is evaluating 2 mutually exclusive projects. Both these projects have 5 years of useful life and has no salvage value. The table below

Amiga PLC is evaluating 2 mutually exclusive projects. Both these projects have 5 years of useful life and has no salvage value. The table below shows these two projects' cash inflow and outflow. Future Cash Flows Cost Year 1 Year 2 Year 3 Year 4 Year 5 Project A $500 000 222 850 212 140 175 600 177 000 173 500 Project B $600 000 257 060 252 090 245 020 239 000 225 000 Required: Based on the nature and the risk associated with projects in this nature, the finance team has determined a 10% required rate of return for project valuation and a payback period of 2 years. You are required to determine which project to be accepted based on: a) Simple payback period method

b. Net present value (NPV) method?

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