1) Consider the following two mutually exclusive projects Year Cash Flow (A) Cash Flow (B) 0 $ 357,000 $ 46,500 1 38,000 23,300 2 58,000 21,300 3 58,000 18,800 4 433,000 13,900 Whichever project you choose, if any, you require a 14 percent return on your investment a 1 What is the payback period for each project (Round your answers to 2 decimal places (e g , 32 16)) Payback period Project A years Project B years a 2 If you apply the payback criterion, which investment will you choose Project A Project B b 1 What is the discounted payback period for each project (Do not round intermediate calculations and round your final answers to 2 decimal places (e g , 32 16)) Discounted payback period Project A years Project B years b 2 If you apply the discounted payback criterion, which investment will you choose Project A Project B c 1 What is the NPV for each project (Do not round intermediate calculations and round your final answers to 2 decimal places (e g , 32 16)) NPV Project A $ Project B $ c 2 If you apply the NPV criterion, which investment will you choose Project A Project B d 1 What is the IRR for each project (Round your answers to 2 decimal places (e g , 32 16)) IRR Project A Project B d 2 If you apply the IRR criterion, which investment will you choose Project A Project B e 1 What is the profitability index for each project (Do not round intermediate calculations and round your final answers to 3 decimal places (e g , 32 161)) Profitability index Project A Project B e 2 If you apply the profitability index criterion, which investment will you choose Project A Project B f Based on your answers in (a) through (e), which project will you finally choose Project A Project B 2) An investment under consideration has a payback of six years and a cost of $876,000 Assume the cash flows are conventional If the required return is 12 percent, what is the worst case NPV (Negative amount should be indicated by a minus sign Round your answer to 2 decimal places (e g , 32 16))

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1) Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 357,000 $ 46,500 1 38,000 23,300 2 58,000

1) Consider the following two mutually exclusive projects:

Year	Cash Flow (A)		Cash Flow (B)
0	$	357,000	$	46,500
1		38,000		23,300
2		58,000		21,300
3		58,000		18,800
4		433,000		13,900

Whichever project you choose, if any, you require a 14 percent return on your investment.

a-1

What is the payback period for each project? (Round your answers to 2 decimal places. (e.g., 32.16))

	Payback period
Project A	years
Project B	years

a-2

If you apply the payback criterion, which investment will you choose?

	Project A
	Project B

b-1

What is the discounted payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

	Discounted payback period
Project A	years
Project B	years

b-2

If you apply the discounted payback criterion, which investment will you choose?

	Project A
	Project B

c-1

What is the NPV for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

	NPV
Project A	$
Project B	$

c-2

If you apply the NPV criterion, which investment will you choose?

	Project A
	Project B

d-1

What is the IRR for each project? (Round your answers to 2 decimal places. (e.g., 32.16))

	IRR
Project A	%
Project B	%

d-2

If you apply the IRR criterion, which investment will you choose?

	Project A
	Project B

e-1

What is the profitability index for each project? (Do not round intermediate calculations and round your final answers to 3 decimal places. (e.g., 32.161))

	Profitability index
Project A
Project B

e-2

If you apply the profitability index criterion, which investment will you choose?

	Project A
	Project B

Based on your answers in (a) through (e), which project will you finally choose?

	Project A
	Project B

2) An investment under consideration has a payback of six years and a cost of $876,000. Assume the cash flows are conventional.

If the required return is 12 percent, what is the worst-case NPV? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))