Projects M and N, of equal risk, are alternatives for expanding Rosa Companys capacity. The firms cost of capital is 13%. The cash flows for each project are shown in the following table:

Year	Project M	Project N
Initial outlay	800 000	800 000
1	150 000	150 000
2	200 000	350 000
3	250 000	300 000
4	300 000	150 000
5	350 000	50 000

The management of Rosa Company has stated that they would like a payback period of two years, if possible, due to the uncertainty caused by the Covid-19 pandemic on these two projects.

REQUIRED:

Evaluate the two (2) projects Rosa Company is considering using all methods of capital budgetting eveluation payback method, discounted payback, NPV and IRR and recommend, with justification, which project Rosa Company should accept.

Suggested format:

	Project M	Project N
Cf0
Cf1
Cf2
Cf3
Cf4
Cf5
I/YR
IRR/YR
NPV
Payback period
Discounted payBack