Question 1[6+2+1+1 = 10 marks] Tables 1 and 2 below show cash projections for a software project. The figures are end-of-year totals in Canadian dollars. The year 0 figure represents the initial investment made at the start of the project. Four decimal places where applicable. Table 1

Year Project 1 cash flow ($) Discount factor @ 7% Discounted cash flow

0 -100,000 1.0000 -100,000

1 10,000

2 10,000

3 10,000

4 20,000

5 100,000

Net profit 50,000 NPV = Table 2

Year Project 1 cash flow ($) Discount factor @ 7% Discounted cash flow

0 -100,000 1.0000 -100,000

1 30,000

2 30,000

3 30,000

4 30,000

5 30,000

Net profit 50,000 NPV =

a. Complete both tables with discounted values and cash flow b. What are the pay-back periods and NPVs for both projects? c. What are the ROIs for both projects? d. Analyze both projects with respect to payback time, NPV, and ROI. Which project will you pick for each of the factors?