Cost-Benefit Analysis The following cash flows are given for two mutually exclusive projects:

Project Theta:

• Initial Investment: $70,000
• Year 1: $18,000
• Year 2: $24,000
• Year 3: $30,000
• Year 4: $36,000

Project Epsilon:

• Initial Investment: $85,000
• Year 1: $20,000
• Year 2: $28,000
• Year 3: $34,000
• Year 4: $42,000

Requirements:

1. Calculate the NPV for each project using a discount rate of 9%.
2. Compute the Payback Period for each project.
3. Calculate the Profitability Index (PI) for each project.
4. Evaluate which project has a higher IRR.
5. Make an investment recommendation assuming the projects are mutually exclusive.