You are a financial analyst working at Officeworks and you are evaluating the following two mutually exclusive projects:

Time Period	Project A Cash Flows	Project B Cash Flows
Cost	(30,000)	(120,000)
Year 1	12000	40,000
Year 2	16000	45,000
Year 3	18,000	48,000
Year 4	18,000	50,000

a)If the estimated cost of capital for these projects is 10% p.a., which project would be selected if the profitability index (PI) method is used?

b)If the estimated cost of capital for these projects is 10% p.a., which project would be selected if the NPV method is used?

c)Comment on the results from parts (a) and (b), and make your final decision on which project to undertake.