Integrative Case 3

A firm is considering two investment opportunities, Project 1 and Project 2, with the following expected cash flows over a five-year period.

Expected Cash Flows:

Year	Project 1	Project 2
0	($250)	($350)
1	$70	$110
2	$90	$130
3	$110	$160
4	$130	$190
5	$150	$220

Requirements:

1. Determine the Payback Period for each project.
2. Calculate the Net Present Value (NPV) at a discount rate of 12%.
3. Compute the Internal Rate of Return (IRR) for both projects.
4. Analyze which project has the shorter payback period.
5. Decide which project should be accepted based on NPV and IRR.