IO-14A. (Size disp017ty ranking problem) The D. Dorner Fanns Corporation is considering purchasing one of two fertilizer-herbicides for the upcoming year. The more expensive of the two is better and will produce a higher yield. Assume these projects are ~utually exclusive and that the required rate of return is 10 percent. Given the following after-tax net cash flows:

a. Calculate the net present value.

b. Calculate the profitability index.

c. Calculate the internal rate of return.

d. If there is no capital-rationing constraint, which project should be selected? If there is a capital-rationing constraint, how should the decision be made? .

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YEAR PROJECT A PROJECT B 0 1 -$500 700 -$5,000 6,000