As the CFO of Tucal Inc., you are confronted to the following two mutually exclusive projects.

Year A B

0 -$1,000(A) -$3,000(B)

1 $700(A) $1,250(B)

2 $700(A) $1,250(B)

3 $1,250(B)

Assuming that the cost of capital is 10%, compute:

1. the payback period for A,
2. the discounted payback period for B,
3. the net present value for B,
4. the internal rate of return for A.
5. Which of the two projects are you going to choose
6. Explain what positive net present value means