Sigma Corporation is considering two projects, Projects K and L, with an initial investment of $90,000 each. The cost of capital is 16 percent. The expected net cash flows are given below:

Expected Net Cash Flows

Year	Project K	Project L
0	($90,000)	($90,000)
1	50,000	45,000
2	40,000	35,000
3	30,000	25,000
4	20,000	15,000

i) Compute the payback period for both projects.
 ii) Calculate the NPV and IRR for both projects.
 iii) Assess which project should be chosen if they are independent.
 iv) Identify the preferred project if they are mutually exclusive.
 v) Discuss the impact on project evaluation if the cost of capital decreases to 10 percent.