Consider the following two mutually exclusive projects:

The required return is 14%

a) What is the payback period for each project?

b) What is the NPV for each project?

c) What is the IRR for each project?

d) What is the profitability index for each project?

e) Which project do we choose?

\begin{tabular}{ccc} Year & Cash Flow (A) & Cash Flow (B) \\ 0 & $423,000 & $39,000 \\ 1 & 45,000 & 20,200 \\ 2 & 61,000 & 13,500 \\ 3 & 78,000 & 17,600 \\ 4 & 538,000 & 14,400 \end{tabular}