A company is evaluating two projects that are mutually exclusive. The initial investment and cash flows are as follows:

If the companys payback is two years and its cost of capital for 15%

a. Determine the payback period of each project?

b. Determine the NPV of each project.

c. Please give your recommendation which project should be accepted based on Payback and NPV? Why?

Project A Project B Initial Investment -$90,000 -$105,000 Year Cash Inflows 1 $50,000 $40,000 2 40,000 45,000 3 30,000 60,000