3. Capital Budgeting Consider the following four projects that are not mutually exclusive: Project A B D E Cash flow at yr 0 Cash flow at yr 1 -3000 1000 -3000 -2000 -5000 5000 -8000 2000 -2000 1000 Cash flow at yr 2 3000 7000 0 3000 8000 Cash flow at yr 3 8000 0 0 12000 8000 a Calculate the payback period for each of the projects. Which project should be has the highest preference if the decision is made according to the payback rule? Explain why choosing this project will hurt the company. b. Calculate the NPV of each of the project if interest rate is 5% compounded yearly. Which projects should be chosen based on the NPV rule? c. Calculate the IRR of each of the project. Which projects should be chosen if the required return is 5%? d. Calculate the profitability index for each of the projects. e. If the company has difficulty of raising enough money in the stock market to take up new profitable projects, what type of constraint is the company facing