Gloster Corporation is considering investing in one of two alternative capital projects. Estimated cash flows relating to the two alternative projects follows:

Required:
(1) Compute the net present value for each of the two alternative projects, assuming that the weighted-average cost of capital is 12%.
(2) Compute the internal rate of return for each of the two alternative projects.
(3) Considering the results of your computations in requirements 1 and 2, what would you recommend? Explain.

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Projectl Project2 $120,000 $120,000 years Initial cash investment Estimated economic life of proje Annual after-tax cash inflows Year 1 Year2 .5 years ear Year 4 Year 5 $ 10,000 50,000 45,000 35,000 25,000 20,000 20,000 30,000 60,000 90,000