Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, that both cost

$120,000.The company's board of directors has set a 4-year payback requirement the cost of capital is

11%. The project cash flows are shown in the following table:

Year Project A. Project B

1 40,000 75,000 2 40,000 50,000 3 40,000 20,000 4 40,000 20,000 5 40,000 20,000 6 40,000 20,000

a. Calculate the payback period for each project. Rank the projects by payback period.

b.Calculate the NPV of each project. Rank the project by NPV.

c.Calculate the IRR of each project. Rank the project by IRR.

d.Make a recommendation.

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Part 1

a.The payback period of project A is

enter your response here

years.(Round to two decimal places.)