Here are the cash flow forecasts for two mutually exclusive projects: Project K and Project L: year 0 are -$233,000 and -$24,000, year 1 are 45,975 and 3,900, year 2 are 30,750 and 15,000, year 3 are 18,900 and 12,890, year 4 are 262,890 and 18,270.

The discount rate is 8.5%.(Note: Apart from question b, show your work the steps in your calculations - in detail).

a. Based on the NPV criterion, which project will you choose? Why?

b. Based on the IRR criterion, which project will you choose? Why? (Use Excel or financial calculator to find the IRR).

c. The acceptable Payback Period for this company is 3 years. Based on the Payback Period criterion, which project will you choose? Why?

d. The acceptable pre-set Discounted Payback Period for this company is 3.5 years.Based on the Discounted Payback Period criterion, which project will you choose? Why?

e. Based on the Profitability Index criterion, which project will you choose? Why?f. Using all the data from answers a to e, which project will you choose? Why?