Surf Tech Inc. must choose between two mutually exclusive projects A and B$.$ Both have a $12\%$ required rate of return.

Consider the following projects cash flows:

Year A B

$0-60,000-140,000$

$112,00090,000$

$228,00045,000$

$340,00048,000$

$---$

a$.$ If you apply the payback criterion, which investment will you choose? Why? $(6$ marks$)$

b$.$ If you apply the NPV criterion, which investment will you choose? Why? $(7$ marks$)$

c$.$ If you apply the projects IRR criterion, which investment will you choose? Why? $(7$ marks$)$

d$.$ What is the rate of return for each project? $(7$ marks$)$

e$.$ Based on your answers to the questions above, which project would you choose? Why? $(3$ marks$).$ Q$)7$