Consider two projects, Project R and Project S, with the following cash flows over a 5-year period:

Project R:

• Year 0: $(300)
• Year 1: $70
• Year 2: $90
• Year 3: $110
• Year 4: $130
• Year 5: $150

Project S:

• Year 0: $(250)
• Year 1: $60
• Year 2: $80
• Year 3: $100
• Year 4: $120
• Year 5: $140

The discount rate is 12%.

a. Define capital budgeting and its importance. b. Calculate the traditional payback period for Project R and Project S. c. Define NPV and calculate it for both projects. d. Define IRR and calculate it for both projects. e. Based on NPV and IRR, which project is more viable?