Given the following cash flows for two potential investments, Project G and Project H:
YearProject GProject H
1$100,000$15,000
2$100,000$45,000
3$100,000$75,000
4$100,000$125,000
5$100,000$20,000
The firm’s discount rate is 14%.
Required:
1.Compute for each project:
oSimple payback period
oDiscounted payback period
oNet present value
oInternal rate of return
oProfitability index
2.Recommend the best investment option for the company.