A firm has an opportunity to invest $180,000 in either Project E or Project F. The following are the projected cash flows:

YearProject EProject F

1$50,000$15,000

2$50,000$25,000

3$50,000$55,000

4$50,000$110,000

5$50,000$45,000

The required rate of return is 9%.

Required:

1.Calculate the payback period for each project.

2.Determine the discounted payback period for each project.

3.Compute the net present value for each project.

4.Calculate the internal rate of return for each project.

5.Assess the profitability index for each project.

d) Based on the results from (1) to (5), advise the management on which project to choose.