The Justin Corporation is considering launching a new product. They are in the high-tech industry and have estimated that the life cycle of the products they are considering is only 5 years. Yet, they feel there is profit to be made. They are considering two products (Product X and or product Z), and feel they only have the financial resources to fund and launch one of them.

Initial Investment: Product X is $130,000, and the initial investment of product Z is $85,000. Their cost of capital (discount rate) is 12%.

Year of cash flow Product X Product Z 1 $25,000 $40,000 2 $35,000 $35,000 3 $45,000 $30,000 4 $50,000 $10,000 5 $55,000 $5,000

1) What is the NPV of both products

2) What is the IRR for both project

3) What product would you select to launch, and WHY?