Question:
The Sanders Electric Company is evaluating two projects for possible inclusion in the firms capital budget. Project M will require a $37,000 investment while project Os investment will be $46,000. After-tax cash inflows are estimated as follows for the two projects:
Year	Project M	Project O
1	$12,000	$10,000
2	12000	10000
3	12000	15000
4	12000	15000
5	15000
a.	Determine the payback period for each project.
	Payback (M) =
	Payback (O) =
b.	Calculate the net present value and profitability index for each project based on a 10 percent cost of capital. Which, if either, of the project is acceptable?
	NPV (M) =
	PI (M) =
	NPV (O) =
	PI (O) =
c.	Determine the internal rate of return and modified internal rate of return for Projects M and O.
	IRR (M):
	IRR (O):
	MIRR calculation of project M:
	MIRR calculation of project O: