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1. Elsyian Fields ,Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusively projects. Project Hydrogen requires an
1. Elsyian Fields ,Inc., uses a maximum payback period of 6 years and currently must choose between two mutually exclusively projects. Project Hydrogen requires an initial outlay of BD 25000, project Helium requires an initial outlay of BD35000. Using the expected cash inflows given for each project in the following table.
| Expected cash flow | ||
| Year | Hydrogen | Helium |
| 1 | BD6000 | BD7000 |
| 2 | BD6000 | BD8000 |
| 3 | BD8000 | BD8000 |
| 4 | BD4000 | BD6000 |
| 5 | BD4500 | BD5000 |
| 6 | BD2000 | BD6000 |
Required:
3. Explain why one of the projects is the better choice than the other.
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