Potters Ltd is a growing company looking for expansion. They are evaluating Project A and Project B. They can accept either Project A or Project B but not both. Each project will last 5 years and have no salvage value at the end. The company's required rate of return for all investment projects is 10%. The company requires a maximum payback period of 3 years for the projects. Other information relevant to Project A and Project B is provided below.

	Project A	Project B
Cost	$180,000	$280,000
Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5	$93,600 $64,800 $81,600 $72,000 $64,800	$64,800 $86,400 $123,600 $166,800 $187,200

Required:

a). Calculate the payback period of each project by simple payback method. (4 marks)

b) Calculate net present value (NPV) for both projects. (4 marks)

c). Which project should Potters Ltd accept? Explain.