Consider the following two mutually exclusive projects:

Year

Cash Flow $($A$)$

$0$

$-$$$200,000$

$1$

$$35,000$

$2$

$$56,000$

$3$

$$75,000$

$4$ $$140,000$

Cash Flow $($B$)-$$$120,000$ $$28,000$ $$45,000$ $$50,000$ $$86,000$

Whichever project you choose, if any, you require a $15\%$ return on your investment.

a$)$ If you apply the payback criterion, which investment will you choose? Why? $(2$ marks$)$

b$)$ If you apply the discounted payback criterion, which investment will you choose? Why? $(2$ marks$)$

c$)$ If you apply the NPV criterion, which investment will you choose? Why? $(3$ marks$)$

d$)$ If you apply the profitability index criterion, which investment will you choose? Why? $(2$ marks$)$

e$)$ If you apply the IRR criterion, which investment will you choose? Why? $(2$ marks$)$ f$)$ What is the cross$-$over rate for these two mutually exclusive projects? $(3$ marks$)$

Based on your answers in $($a$)$ through $($e$),$ which project will you finally choose? Why? $(2$ marks$)$