A firm is evaluating two projects with different cash flows. Project T requires an initial investment of $25,000 and Project U requires $27,000. Project T has the following expected cash flows over four years: $6,000, $7,000, $8,000, and $10,000. Project U has the following expected cash flows over four years: $7,000, $8,000, $9,000, and $10,000.

Requirements:

• Compute the NPV for each project using a discount rate of 14%.
• Calculate the IRR for each project.
• Determine the profitability index (PI) for each project.
• Which project should be chosen based on the IRR?