There are two mutually exclusive projects under active consideration of a company. Both the projects have a life of 5 years and have initial cash outlays of $100,000 each. The company pays tax at 50% rate and the maximum required rate of company has been given as 10%. The straight line method of depreciation will be charged on the projects. The projects are expected to generate a net cash flow before taxes as follows:

Year	Project X	Project X
1 2 3 4 5	40,000 40,000 40,000 40,000 40,000	60,000 30,000 20,000 50,000 50,000

Required:

With the help of the above given information, calculate.

1. The pay-back period of each project
2. The average rate of return of each project

The net present value of each project.