Reference no: EM132570883

Fitch Industries is in the process of choosing the better of two equal-risk, and mutually exclusive capital expenditure projects, H and N. The relevant cash flows for each project are shown in the following table. The firm's cost of capital is 14%.

                                            Project H (rand)                     Project N (rand)

Initial investment:                    285 000                               270 000

Year Cash inflows

1                                          100 000                                   110 000

2                                             100 000                                  100 000

3                                                100 000                                   90 000

4                                                  100 000                                     80 000

Question 1: Calculate each project's payback period

Question 2: Calculate the NPV for each project

Question 3: Calculate the IRR for each project

Question 4: Summarize the preferences dictated by each measure you calculated, and indicate which project you would recommend. Explain why.