Question 8

Given the cash flows for Project I and Project J:

Year	Project I	Project J
0	-65000	-85000
1	18000	20000
2	22000	24000
3	25000	28000
4	30000	32000
5	35000	36000
6	40000	40000

Requirements:

1. Calculate the NPV for both projects assuming a required rate of return of 11%.
2. Determine the IRR for each project.
3. Calculate the traditional payback period for both projects.
4. Discuss which project(s) should be selected if they are independent.
5. Discuss which project should be selected if they are mutually exclusive.