The two parts are independent of each other. Assume that all cash flows are after-tax cash flows. 1. Royce Hardware is considering investing in one of the following two projects. Either project will require an investment of $20,000. The expected cash flows for the two projects follow. Assume that each project is depreciable. Year Project A $ 6,000 8,000 10,000 10,000 10,000 Project B $ 6,000 8,000 10,000 3,000 3,000 2. Amy Lee is interested in investing in some tools and equipment so that she can run her own dental office. The cost of the tools and equipment is $30,000. She estimates that the return from owning his own equipment will be $9,000 per year. The tools and equipment will last six years. REQUIRED: 1. What is the payback period for each of Royce Hardware's projects? If rapid payback is important, which project should be chosen? Which would you choose? (3 marks) 2. Which of Royce's projects should be chosen based on the Accounting Rate of Return (ARR)? Justify your choice with calculations. (2 marks) 3. Should Royce use payback period or ARR to decide which project to invest? Why? (2 marks) 4. Assuming a required rate of return of 8 percent for Amy, calculate the NPV of the investment. Should Amy invest? (3 marks) 5. What are some of the qualitative factors that Amy can consider while making her decision? (2 marks)