Question 2

Assume the following cash flows for two projects, Project M and Project N:

Year	Project M	Project N
0	-80000	-140000
1	20000	30000
2	25000	35000
3	30000	40000
4	35000	45000
5	40000	50000
6	45000	55000

Requirements:

1. Calculate the NPV for both projects with a discount rate of 12%.
2. Determine the IRR for each project.
3. Calculate the payback period for both projects.
4. Discuss which project should be selected if they are independent.
5. Recommend which project to choose if they are mutually exclusive.