Project P costs $15,000 and is expected to produce benefits (cash flows) of $4,500 per year for five years. Project Q costs $37,500 and is expected to produce cash flows of $11,100 per year for five years. Calculate each projects (a) net present value (NPV), (b) internal rate of return (IRR), and (c) mod- ified internal rate of return (MIRR). The firms required rate of return is 14 percent. Compute the (a) NPV, (b) IRR, (c) MIRR, and (d) discounted payback for the following independent capital budgeting projects. (r = 9%)

Year 0: Project T = ($8000) Project U = ($10,000)

Year 1: Project T = 2,000 Project U = 9,000

Year 2: Project T = 1,000 Project U = 5,000

Year 3: Project T = 7,000 Project U = (3,100)

Which project(s) should the company purchase? Why?