P10–20 NPV, with rankings Botany Bay, Inc., a maker of casual clothing, is considering four projects. Because of past financial difficulties, the company has a high cost of capital at 15%.

a. Calculate the NPV of each project, using a cost of capital of 15%.

b. Rank acceptable projects by NPV.

c. Calculate the IRR of each project, and use it to determine the highest cost of capital at which all the projects would be acceptable.

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Initial investment (CF) Project A $50,000 Project B Project C Project D $100,000 $80,000 $180,000 Year (t) Cash inflows (CF,) 1 $20,000 $35,000 $20,000 $100,000 2 20,000 50,000 40,000 80,000 3 20,000 50,000 60,000 60,000