The timing will have no ressdual value and a four year life Each project has the same of cash flows is very important in evaluating capital in one of three projects Each project has an initial investment of Probtem 3. (21 points ota $150,000 an-that will have no residual nis. The cash tow projections are as f David Eric Frieda Project Year 1 Year 2 Year 3 Year 4 Total $50,000 50,000 50,000 50,000 $200,000 $20,000 30,000 50,000 100,000 S200,000 $100,000 50,000 30,000 20,000 $200,000 a. (4 points) Calculate the payback period for projects David and Frieda. Show your work. Which project is better? Why? b. (4 points) Calculate the average rate of return (uses accounting income) for David and Eric. Remember that the accounting income will be equal to the above cash flow projections reduced by the depreciation expense. The company uses the straight line depreciation method. Show your work. Which project is better? Why? value tables are on the tollow ing page sing Hone tobles oy f the cosh hows fo alh prject Nhow yow entotiato an 10Wh dscount t ivauating capital investment projetste the presen u those tobles or your o cial caleulator, calculate the present value David, PV ot ash how ndot yotur inputs if you use a financial calculator. Erio, PV of cash nows Frieda, PV of cash flows it has a nice even cash flow from year to d. (4 points) The owner of the business likes project David best because year. Also, she says that they have always used the average rate o each project has the same average cash flow, each project is an equa the options? What analysis method would you recommend? f return method to evaluate projects, and since lly good choice. Is this the best way to analyze