a) Based on the payback period, the payback period for Project (A) is 2.66 years and the payback period for Project (B) is 2.02 years. This means that Project (A) will recover its initial investment in 2.66 years and Project (B) will recover its initial investment in 2.02 years. The company should choose Project (B) because the payback period for Project (B) is shorter than the payback period for Project (A) and is less than the 4-year maximum payback period required by the company. The payback period of a project that is shorter and faster and has a payback period of less than a certain number of years should be accepted (Kaplan Higher Education Study Guide, 2015, p. 74). Furthermore, the project with a shorter payback period has less risk than the project with a longer payback period. They allow the company to recover its investment more quickly so that the company can reinvest the money elsewhere. The payback period represents the total time required for a Capital Budgeting project to recover its primary cost.b) Based on net present value (NPV), the NPV for project (A) is $21,152.94 and the NPV for project (B) is $7,783.10. The company should choose Project (A) because Project (A) has the higher NPV than Project (B). The general rule is that when the NPV is positive, the project should be accepted because projects with a positive NPV are expected to increase firm value or shareholder wealth, on the other hand, when the NPV is negative, the project should not be accepted. undertaken because the investment will not add value to the company (Kaplan Higher Education Study Guide, 2015, p. 71); in the case of mutually exclusive projects, the project with the highest Net Present Value must be accepted. Therefore, NPV makes the decision…half the paper…of money and the value of cash flows in future periods. Furthermore, the NPV approach has no significant flaws (Kaplan Higher Education Study Guide, 2015, p. 94) and is the desired method for evaluating projects because it considers risk and the time value of money and has no random limitations. The VAN is easy to use, easily comparable and customizable. Only if all alternatives are discounted at the same time does the NPV allow a simple comparison between investment alternatives. Provides clear decision-making tips for investments. The NPV rule also effortlessly handles mutually exclusive and independent projects compared to the IRR which cannot be used for exclusive or different time period projects, the IRR can exaggerate the rate of return and also the profitability ratio which could do not provide the right choice when used to compare mutually exclusive designs.