Question 8

A company is evaluating two mutually exclusive projects. Project A requires an initial investment of $300,000 and will generate $80,000 annually for 5 years. Project B requires an initial investment of $400,000 and will generate $100,000 annually for 6 years. The company's cost of capital is 10%. Calculate for each project:

1. Net Present Value (NPV).
2. Internal Rate of Return (IRR).
3. Payback Period.
4. Discounted Payback Period.
5. Profitability Index (PI).