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ABC Enterprises is considering two investment opportunities. The cash flows for each are provided below. The discount rate is 12%. Year Project S1 Project T1

ABC Enterprises is considering two investment opportunities. The cash flows for each are provided below. The discount rate is 12%.

Year

Project S1

Project T1

0

-$100,000

-$120,000

1

$30,000

$35,000

2

$40,000

$45,000

3

$50,000

$55,000

4

$60,000

$65,000

a. Calculate the payback period for each project. b. Compute the NPV and recommend which project should be undertaken

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