You are presented with the following projections for investment projects 'X' and 'Y'.

The required rate of return is 12% and there is no salvage or residual value for both investments. Ignore taxation.

ProjectX Project Y

Initial investment outflow 170 000 245 000

Subsequent cash inflows

Year 1 45 000 70 000

Year 2 45 000 80 000

Year 3 45 000 90 000

Year 4 45 000 60 000

Year 5 45 000 40 000

(i)Calculate the payback period for both projects.

(ii)Calculate the net present value for both projects.

(iii)Calculate the internal rate of return for project 'X'.

(iv) Advise on which project should be selected for investment. Justify your recommendation