A company has $260,000 to invest in either Project Q or Project R. The expected cash flows are:

YearProject QProject R

1$85,000$30,000

2$85,000$50,000

3$85,000$95,000

4$85,000$165,000

5$85,000$70,000

The required rate of return is 10%.

Required: a) For each project, determine the:

1.Simple payback period

2.Discounted payback period

3.Net present value

4.Internal rate of return

5.Profitability index

b) Advise the firm on which project to select based on the results of your calculations.