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:

1. Calculate the payback period of each project by simple payback method.
2. Calculate net present value (NPV) for both projects.
3. Which project should Potters Ltd accept? Explain.