15. Comparing Investment Criteria Consider the following two mutually exclusive projects: Year 0 1 Cash Flow (A) |--$245,000 34,000 49,000 51,000 325,000 Cash Flow (B) -$53,000 31,900 21,800 17,300 16,200 2 3 4 Whichever project you choose, if any, you require a return of 13 percent on your investment a. If you apply the payback criterion, which investment will you choose? Why? b. If you apply the NPV criterion, which investment will you choose? Why? e. If you apply the IRR criterion, which investment will you choose? Why? d. If you apply the profitability index criterion, which investment will you choose? Why? Based on your answers in parts (a) through (d), which project will you finally choose? Why? 16. NPV and IRR Bausch Company is presented with the following two mutually exclusive projects. The required return for both projects is 15 percent e. 0 1 2 3 4 Year Project M Project N - $140,000 --$359,000 61.500 159,300 73.400 168,400 68,100 154,800 40,500 110,400 a. What is the IRR for each project! b. What is the NPV for each project? e. Which, if either of the projects should the company accept? 17. NPV and Profitability Index Coore Manufacturing has the following two possible projects. The required return is 12 percent 17. NPV and Profitability Index Coore Mankfacturing has the following two possible projects. The required return is 12 percent. Year 0 1 2 3 4 Project Y -$47,600 23,900 18,600 20,700 14,600 Project Z - $81.000 34.000 32,800 30,500 27.300 a. What is the profitability index for each project? b. What is the NPV for each project? Which, if either of the projects should the company accept