Hardware Plus Limited (HPL) is considering four projects to modernise their operations. The initial capital outlay for each project is $150,000. The cost of capital for the company is 8%. HPL has a payback cut off years of 4 years. The cash flow for each project are detailed in the table below.

Year

Lumber

Forklift

Cement

Steel

Initial Outlay

(150,000)

(150,000)

(150,000)

(150,000)

1

80,000

70,000

2

20,000

80,000

30,000

3

30,000

30,000

40,000

70,000

4

40,000

30,000

60,000

40,000

5

60,000

30,000

6

30,000

i.)Calculate each project's Payback period (6 Marks)

ii.)Which project(s) should be accepted under the Payback period?(2 Mark)

iii.)Calculate each project's Net Present Value (NPV).(12 Marks)

iv.)Based on the NPV results, if the projects are mutually exclusive, which project should be selected?2 Marks)

v.)Based on NPV results, if the projects are independent, which project should be selected?(3 Marks)