PQR Incorporated is considering two projects, Project P and Project Q. The following details are available:

• Initial Investment: $100,000 each
• Project Duration: 5 years
• Salvage Value: $10,000 each
• Depreciation: Straight line
• Required Rate of Return: 12%

Cash Flows:

Year	Cash flows (Project P)	Cash flows (Project Q)
1	30,000	25,000
2	25,000	30,000
3	20,000	20,000
4	15,000	25,000
5	10,000	10,000

a) What is the difference between capital budgeting and capital structure?

b) Explain the relevance of the salvage value in investment decisions.

c) Calculate for both projects: i) The payback period. ii) NPV. iii) IRR. iv) Which project should be selected based on these calculations?