Question $1(28$ marks$)$

A company is considering the following two mutually exclusive projects. The cash flows of the projects are as follows:

$\backslash$table$[[$Annual cash flows:,Project X$,$Project Y$],[$Year $0,$$$(250,000),$$$(250,000)],[$Year $1,$$$23,000,$$$120,000],[$Year $2,$$$69,000,$$$110,000],[$Year $3,$$$240,000,$$$55,000],[$Year $4,$$$29,000,$$$50,000],[$Required return $=12\%,,]]$

A$.$ Compute the payback period of each project and determine which project the company should accept.

$(5$ marks$)$

B$.$ List $3$ disadvantages of using payback period to evaluate a project.

$(6$ marks$)$

C$.$ Compute the discounted payback period of each project and determine which project the company should accept. Is the conclusion same as $($A$)?$ Explain if it is not the same.

$(8$ marks$)$

D$.$ Compute the NPV of each project and determine which project the company should accept.

$(7$ marks$)$

E$.$ Based on the above analysis, which project should the company accept?

$(2$ marks$)$