AKP Fashion Designers are considering two investment projects. AKP expects at least $12\%$ rate of return from similar projects. The estimated net cash flows from each project are as follows:

Year Project ABC Project CBD

Initial Cash flow $($$$575,000)($$$575,000)$

$1$ $$120,000$ $$217,900$

$2$ $$137,000$ $$200,000$

$3$ $$153,450$ $$167,000$

$4$ $$209,000$ $$142,350$

$5$ $$227,800$ $$120,000$

Required

$1.$ Calculate Net present value $($NPV$)$ and payback period.

$2.$ Recommend the best project based on NPV criteria and explain the reason for your recommendation.