Nicholson Roofing Materials Inc is considering two mutually exclusive projects, each with an initial investment of $180,000. The company's board of directors has a set a 4 year payback requirement and has set its cost of capital at 10%. The cash ainflows associated withthe two projects are shown in the following table.

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 an justify a recommendation.

TABLE

Cash inflows (CFt)

Year Project A Project B

1 60,000 85,000

2 60,000 60,000

3 60,000 50,000

4 60,000 50,000

5 60,000 50,000

6 60,000 50,000