Houston Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the NPV. The WACC is 7.5 %. year 0 1 2 3 4 CF_S -$1,100 $715 $780 $100 $100 CF_L -$2,700 $845 $945 $800 $1,400 A. What is the payback period for project L? B. What is the NPV of project L? C. What is the IRR of Project L? D. What is the Profitability index of Project S?

E. Which project should be chosen?