A company needs to decide between two investment opportunities, Project M and Project N, with an available budget of $400,000 and the following cash flows:

Project M:

• Year 1: $120,000
• Year 2: $130,000
• Year 3: $140,000
• Year 4: $150,000
• Year 5: $160,000

Project N:

• Year 1: $60,000
• Year 2: $70,000
• Year 3: $80,000
• Year 4: $90,000
• Year 5: $100,000

The discount rate is 15%.

Required:

1. Calculate for each project:
   • Payback period
   • Discounted payback period
   • Net present value
   • Internal rate of return
   • Profitability index
2. Which project should the company undertake and why?