DEF Inc. is assessing two potential projects, each with unique cash flows:

• Project 1:

• Initial Investment: $160,000
• Cost of Capital: 9%
• Cash Inflows:
  • Year 1: $50,000
  • Year 2: $60,000
  • Year 3: $70,000
  • Year 4: $80,000

• Project 2:

• Initial Investment: $180,000
• Cost of Capital: 10%
• Cash Inflows:
  • Year 1: $60,000
  • Year 2: $70,000
  • Year 3: $80,000
  • Year 4: $90,000

Requirements:

1. Calculate the payback period for each project.
2. Compute the NPV for each project.
3. Determine the PI for each project.
4. Make a recommendation on which project is better and justify your choice.