Reference no: EM132955704

A company is considering two mutually exclusive projects, each with an initial investment of $150,000. The company has set a 4 year maximum payback period, while its cost of capital is 9%. The cash flows are shown in the below table.

Cash Inflows
Year
Project A
Project B
1
$45,000
$75,000
2
$45,000
$60,000
3
$45,000
$30,000
4
$45,000
$30,000
5
$45,000
$30,000
6
$45,000
$30,000

a. Calculate payback period for each project

b. Calculate the NPV for each project at 0%

c. Calculate the NPV for each project at 9%

d. Derive the IRR of each project

e. Rank the projects by each of the techniques used. Make and justify a recommendation.