Consider projects A and B with the following cash flows: a. Which project has the higher NPV

Question:

Consider projects A and B with the following cash flows:

a. Which project has the higher NPV if the discount rate is 10%?
b. Which has the higher profitability index?
c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? Which project is most attractive to a firm that is limited in the funds it can raise?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...