A firm is considering two investments, E and F, with the following cash flows:

• Initial Investment: $25,000
• Project E:
  • Year 1: $6,000
  • Year 2: $7,000
  • Year 3: $8,000
  • Year 4: $10,000
• Project F:
  • Year 1: $9,000
  • Year 2: $8,000
  • Year 3: $7,000
  • Year 4: $6,000

Requirements:

1. Compute the net present value (NPV) of each project if the discount rate is 14%.
2. Find the internal rate of return (IRR) for each project.
3. Determine the profitability index (PI) for each project.
4. Analyze which project should be selected based on the NPV criterion.