(3) Net present value, assuming a 10% cost of capital. (3 marks) (4) Profitability index, assuming a 10% cost of capital. (3 marks)

(a) Consider the results from analyzing the following five projects: Project AA BB CC DD EE Investment/outlay Profitability Index $300,000 1.033 400,000 1.050 200,000 1.050 100,000 1.100 200,000 0.925 Suppose there is a limit on the capital budget of $600,000. Find the NPV for each project and determine which projects should be invested in, given that capital budget and what will be the total NPV? (8 marks) (b) You are evaluating an investment project, Project XX, which requires an initial investment of $100,000 and has the following cash flows: Period 1 2 3 4 AWIN Cash Flow $135,000 $35,000 $35,000 -$35,000 Calculate the following