1. AZTEC Company is considering two capital investment proposals. Estimates regarding each project are provided below:

Project Candy Project Cracker

Initial investment $400,000 $600,000

Annual net income 30,000 46,000

Net annual cash inflow 110,000 143,000

Estimated useful life 5 years 6 years

Salvage value -0- -0-

The company requires a 10% rate of return on all new investments.

Present Value of an Annuity of 1

Periods 9% 10% 11% 12%

5 3.890 3.791 3.696 3.605

6 4.486 4.355 4.231 4.111

1. What is the Net Present Value of each of the two projects? (10 Marks)
2. Evaluating the two projects on the Payback method, which project would you select as the more attractive.Please state your reasons why. (10 Marks).