2. Smith Company is considering two projects. Smith requires a minimum rate of return of 6%. Project A Project E Initial investment $1,000,000 $500,000 Annual cash flows $300.000 $170,000 Life of the project 4 year 4 years a) Compute the payback period of each option. b) Calculate the net present value of each option assuming a cost of capital of 6%. The present value factor of an annuity for 4 years at 6% is 3.465. c) Determine the profitability index of each option assuming a cost of capital of 6%. d) Based on the above analysis, which option should the company pursue? e) Please give two reasons for your answer in part d