Delta Ltd is considering two investment projects, Project E and Project F.

Project E

• Year 0: -$70,000
• Year 1: $15,000
• Year 2: $25,000
• Year 3: $35,000
• Year 4: $45,000

Project F

• Year 0: -$80,000
• Year 1: $10,000
• Year 2: $30,000
• Year 3: $40,000
• Year 4: $50,000

The discount rate for Project E is 6%, and for Project F is 11%.

Requirements:

1. Calculate the payback period for each project.
2. Identify which project satisfies a payback period of 3 years.
3. Compute the profitability index for both projects.
4. Advise on which project to accept based on the profitability index.
5. Calculate the net present value (NPV) and suggest the preferred project based on NPV.