Tyson Fields is considering two alternative investments. The cost of each is $100,000. The annual net cash inflows for the five-year investment periods are as follows:

Alternatives

Year A B

1 $20,000 $10,000

2 $30,000 $60,000

3 $40,000 $60,000

4 $40,000 $20,000

5 $30,000 $10,000

Required:

a. Calculate the payback period for each alternative

b. Using a discount rate of 10 percent, what is the NPV of each alternative?

c. What is the internal rate of return for each alternative?

d. Calculate the profitability index for each alternative.