Consider the following two mutually exclusive projects with a 15% cost of capital:

Year CF Project A CF Project B

0 -$350,000 -$50,000

1 45,000 24,000

2 65,000 22,000

3 65,000 19,500

4 440,000 14,600

Using the payback method, which project would you choose? Why?

Using NPV, which project will you choose? Why?

Using IRR, which project will you choose? Why?

Using the PI, which project will you choose? Why?

Based on your answers in (a) through (e), which project will you choose? Why?

If the projects are independent, what is your decision? Why?