Question: Question 2 Project Selection Dragon Products Company is considering two projects. The projects' cash flows are as follows EXPECTED NET CASH FLOWS YEAR PROJECT A

Question 2 Project Selection Dragon Products Company is considering two projects. The projects' cash flows are as follows EXPECTED NET CASH FLOWS YEAR PROJECT A PROJECTS 0 (S10300) [12.500) 1 1700 2870 2 1930 2450 3 2500 4700 4 2800 4575 5 4200 3450 Discount Rate for both pojects = 6.856 3/5 REQUIRED Find the Payback Period (PBP] of both projects 2. What is the Discounted PBP of both projects 3. Calculate the Net Present Value of the two projects and decide which one is better? 4. What is the profitability index of both products ? What is the function of Pl in project selection? 5. What are the IRR of the projects? Which of the projects is the best using IRR as a criteria? Why? 6. Why is sunk cost not considered when deciding about selecting a project? Which cost is considered and why? [40 marks)

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