RoofingMaterials, Inc., is considering two mutually exclusiveprojects, each with an initial investment of $160,000. Thecompany's board of directors has set a4-year payback requirement and has set its cost of capital at 9%. The cash inflows associated with the two projects are shown in the followingtable:

Project AProject B

1$50,000$65,000

2$50,000$50,000

3$50,000$40,000

4$50,000$40,000

5$50,000$40,000

6$50,000$40,000

1. Calculate the payback period for each project. Rank the projects by payback period.

2. Calculate the NPV of each project. Rank the project by NPV.

3. Calculate the IRR of each project. Rank the project by IRR.

4. Make a recommendation.