The Computer Games Division of Entertainment, Inc. is considering two investment projects, each of which has an up-front expenditure of $30,000. You estimate that the cost of capital is 9 percent and that the investments will produce the following after-tax cash inflows:

Year	Project A	Project B
1	6,000	22,000
2	12,000	16,000
3	16,000	12,000
4	22,000	6,000

Prepare answers to the following questions. Please show your calculations.

1. What is the payback period for each of the projects?

What is the Net Present Value (NPV) for each of the projects?

3. If the two projects are independent and the cost of capital is 9 percent, which project or projects should

Entertainment, Inc. undertake?

4. If the two projects are mutually exclusive and the cost of capital is 9 percent, which project should

Entertainment, Inc. undertake? (Hint: With mutually exclusive projects