Question: outlay of $95,000 and a required return of 8%. The after-tax cash flows for the two projects are: Year 1 2 3 4 5

outlay of $95,000 and a required return of 8%. The after-tax cash

outlay of $95,000 and a required return of 8%. The after-tax cash flows for the two projects are: Year 1 2 3 4 5 Compute each project: i. Payback Period marks) ii. Net Present NPV Cash Flow Project A $ 8,000 21,000 30,000 34,000 36,000 129,000 Table 1. Project B % 25,000 25,000 25,000 25,000 25,000 125,000 (4 (7 marks) iii. Profitability Index (5 marks) iv. Using the information calculated and the information given about the projects; explain which project should be selected (4 marks)

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