Question Island Corporation is considering two mutually exclusive projects. Project 1 requires an investment of $80,000, while Project 2 requires an investment of $90,000. Cash revenues and cash costs for each project are shown below: YEAR Revenues Variable costs Fixed costs $30,000 8,000 12,000 $50,000 12,000 10,000 PROJECT 1 3 $70,000 20,000 10,000 4 $90,000 25,000 10,000 YEAR Revenues Variable costs Fixed costs $65,000 15,000 5,000 $80,000 30,000 20,000 PROJECT 2 3 $60,000 14,000 10,000 4 $40,000 12,000 8,000 The company estimates that at the end of the fourth year Project 1 would have a salvage value of $10,000 and Project 2 would have a salvage value of $5,000. a. Required: Calculate the payback period of each project. (10 marks) b. Determine the net present value of each project using a 5% percent discount rate. (20 marks) c. Compute profitability index. (10 marks) d. Critically discuss the three different methods, payback period, present value, profitability index as an investment appraisal method. (25 marks) e. Prepare a memorandum for management stating your recommendation. (10 marks) f. Compute the breakeven point for each Project, if the expected output for project 1 is 25,000 units and Project 2 has an expected output of 49,000 units. (15 marks) g. Compute the output of each project if a profit was $50,000. (10 marks) Question Island Corporation is considering two mutually exclusive projects. Project 1 requires an investment of $80,000, while Project 2 requires an investment of $90,000. Cash revenues and cash costs for each project are shown below: YEAR Revenues Variable costs Fixed costs $30,000 8,000 12,000 $50,000 12,000 10,000 PROJECT 1 3 $70,000 20,000 10,000 4 $90,000 25,000 10,000 YEAR Revenues Variable costs Fixed costs $65,000 15,000 5,000 $80,000 30,000 20,000 PROJECT 2 3 $60,000 14,000 10,000 4 $40,000 12,000 8,000 The company estimates that at the end of the fourth year Project 1 would have a salvage value of $10,000 and Project 2 would have a salvage value of $5,000. a. Required: Calculate the payback period of each project. (10 marks) b. Determine the net present value of each project using a 5% percent discount rate. (20 marks) c. Compute profitability index. (10 marks) d. Critically discuss the three different methods, payback period, present value, profitability index as an investment appraisal method. (25 marks) e. Prepare a memorandum for management stating your recommendation. (10 marks) f. Compute the breakeven point for each Project, if the expected output for project 1 is 25,000 units and Project 2 has an expected output of 49,000 units. (15 marks) g. Compute the output of each project if a profit was $50,000. (10 marks)