XYZ Ltd is considering two projects, Project A and Project B, both requiring an initial investment of $100,000 The after tax cash flows are as follows Year Project A (USD) Project B (USD) 0 (100,000) (100,000) 1 30,000 20,000 2 40,000 30,000 3 50,000 50,000 4 60,000 70,000 5 70,000 80,000 Requirements a Compute the payback period for both projects b Calculate the IRR for both projects c Based on IRR, which project should be selected

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Question: XYZ Ltd. is considering two projects, Project A and Project B, both requiring an initial investment of $100,000. The after-tax cash flows are as follows:

XYZ Ltd. is considering two projects, Project A and Project B, both requiring an initial investment of $100,000. The after-tax cash flows are as follows:

Year	Project A (USD)	Project B (USD)
0	(100,000)	(100,000)
1	30,000	20,000
2	40,000	30,000
3	50,000	50,000
4	60,000	70,000
5	70,000	80,000

Requirements: a. Compute the payback period for both projects. b. Calculate the IRR for both projects. c. Based on IRR, which project should be selected?

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