A company is considering investing $300,000 in either Project C or Project D. The projected cash flows are as follows:
YearProject CProject D
1$80,000$25,000
2$80,000$50,000
3$80,000$100,000
4$80,000$200,000
5$80,000$35,000
The discount rate is 15%.
Required: a. Calculate for each project:
•Simple payback period
•Discounted payback period
•Net present value
•Internal rate of return
•Profitability index
b. Recommend which project to choose based on the calculated metrics.