2) As a project officer of SBM Corporation, you are asked to evaluate two mutually exclusive projects that have the following cash flow patterns. The cost of capital of the firm is 12% pa Project A and B would require an initial investment of $20,000 and $15,000 respectively Year Project A Project B $7,000 $7,000 2 8,000 7,000 3 9,000 6,000 4 10,000 4,000 Evaluate the above two projects using the Payback and Net Present Value methods a) b) Which project would you recommend to the company? Why? a Payback method Project A Project B Recommendation: NPV method Pai k=1296 PROLA Year 1 Pre B 7.000 Pro B 7.000 7,000 6,000 3 8,000 9,000 10,000 4,000 PV Dali (20,000) (15,000) NPT aBbCc AaBbCel AaBbCcI AaBbCd AaBbCcI Caption 1 Heading 1 1 Heading 2 1 Heading 3 1 Normal v O Find 6. Replace W Select Dictate Styles Editing Voice Recommendation: b