Question 8

Scenario: Consider the cash flows for Project L and Project M:

Year	Project L	Project M
0	-75000	-140000
1	25000	40000
2	20000	35000
3	27000	45000
4	30000	50000
5	35000	60000
6	38000	65000

Requirements: a. Compute the NPV for each project assuming a required rate of return of 9 percent. b. Determine the IRR for each project. c. Calculate the traditional payback period for each project. d. Recommend which project(s) should be undertaken if they are independent. e. Recommend which project should be undertaken if they are mutually exclusive.