You are given the expected positive cash flows for two new passenger rail connection between RoadRiver (RR) and TrainTracks (TT), Alberta. From Table 1:

	Project RR		Project TT
Year	Cash flows		Cash flows
0	(125,000)		(260,000)
1	65,000		100,000
2	85,000		140,000
3	75,000		120,000
4	55,000		80,000

Calculate the payback, NPV, IRR and Profitability Index for each project. If the discount rate is 8%

The Symington Corporation Ltd. is considering investing in one of two mutually exclusive projects. Project A requires an immediate cash outlay of $1,000, while project B requires an immediate cash outlay of $1,400. Project A has a life of four years; Project B, five years. The cost of capital is 10%. After taxes net cash flows generated by each investment have been as follows:

Year	0	1	2	3	4	5
	Investment
A	($1,000)	$250	$300	$400	$500	-0-
B	($1,400)	$600	$500	$400	$300	$200

1. Calculate payback for each investment. (2 marks)
2. Calculate the Net Present Value (NPV) for each investment. (2 marks)
3. Calculate the Internal Rate of return (IRR) for each investment. (2 marks)
4. Calculate the Profitability Index (PI) for each investment. (2 marks)
5. Which investment would you select? Why? (2 marks)