Please solve and Explain the following exercise.

QUESTION 7 Rectangular Snip Consider the following two mutually exclusive projects (the required return on both projects is 12%). Which projects would you choose based on Payback method. NPV and Profitability index? What would be your final decision and why? Year Project Y r = 12% (0.12) CFs Discounted CFS (234,000) $ (234,000) 54,000 76,000 0 S Project X r = 12% (0.12) CFs Discounted CFs (425.000) $ (425,000) 134,000 215,000 169,000 86,000 S 1 $ 2 S S S S 3 3 U 110,000 4 S $ 125,000