STU Ltd. is analyzing two projects, Project E and Project F, with the same initial investment of USD 90,000. The after-tax cash flows are:

Year	Cash flows (Project E)	Cash flows (Project F)
(Initial Investment)	(90,000)	(90,000)
1	25,000	30,000
2	25,000	20,000
3	20,000	25,000
4	10,000	15,000

a. Determine the payback period for each project.

b. If STU Ltd.’s maximum acceptable payback period is 2.5 years, which project should they proceed with? Justify your decision.