ABC Ltd. is evaluating two investment opportunities, Project X and Project Y. The initial investment for both projects is $150,000, and the required rate of return is 12%. The projected cash inflows are as follows:

Projected Cash Inflows (in $):

• Project X: $40,000 annually for 5 years.
• Project Y: $35,000 annually for 5 years.

Requirements:

1. Calculate the payback period for Project X and Project Y.
2. Determine the NPV for both projects.
3. Calculate the IRR for each project.
4. Assess the profitability index for both projects.
5. Decide which project should be chosen based on the NPV and IRR.