E$-$Waste is considering two alternative uses for a warehouse. It can store toxic waste

containers $($Investment A$)$ or electronic equipment $($Investment B$).$ The cash flows are as

follows

In each of the parts $($a$)-($b$)$ below, you have to apply a specified rule according to which

investment A or B $($or neither$)$ is to be chosen. Justify your conclusion with the necessary

calculations that you show. The cost of capital is $10\%.$

$($a$)$ Assume the firm wants a discounted payback period of $2$ years on projects. Determine the

discounted payback period $($correct to $2$ decimal places$)$ for each project. Apply the

discounted payback rule to select A or B $($or neither$).$

$($b$)$ Apply the NPV rule to select A or B $($or neither$)$

$($c$)$ Some people argue that the IRR rule is better than the NPV rule because you do not

require the cost of capital to compute the IRR. How would you respond to this statement?