Questions 2 (20 marks)

1. Two mutually exclusive projects, C and D, will have an initial cost of $20,000 each and are expected to yield the following aftertax cash flows.

Year	C	D
1	$4,000	$8000
2	$6,000	$6,000
3	$5,000	$6,000
4	$4,000	$1,000
5	$6,000	$3,000
6	$2,000	$4,000
7	$2,000
8	$2,000

1. Based on the payback technique, if the maximum acceptable Payback Periodis 4 years, would you accept Project C, Project D, neither or both (6 marks)
2. Based on the NPV technique, if the required rate of return is 12%, would you accept Project C, Project D, neither or both? (7 marks)
3. Based on the EAA technique, if the required rate of return is 12%, would you accept Project C, Project D, neither or both? (7 marks)