A company has $200,000 available for investment in either Project M or Project N. The cash flows are as follows:

YearProject MProject N

1$65,000$20,000

2$65,000$40,000

3$65,000$75,000

4$65,000$140,000

5$65,000$60,000

The discount rate is 12%.

Required: a) For each project, calculate the:

1.Simple payback period

2.Discounted payback period

3.Net present value

4.Internal rate of return

5.Profitability index

b) Recommend which project should be undertaken based on your findings.