Alltechniques: Decision among mutually exclusive investmentsPound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and subsequent cash inflows associated with these projects are shown in the following table.

Cash flows

Project A

Project B

Project C

Initial investment(CF)

$30,000

$70,000

$60,000

Cash inflows(CF), t=1 to 5

$10,000

$21,000

$22,000

a.Calculate

the payback period for each

project.

b.Calculate the net

present value(NPV) of eachproject, assuming that the firm has cost of capital equal to 13%.

c.Calculate the internal

rate of return(IRR) for each

project.

d.Indicate which project you would recommend.

Q:

1The payback period of project A is .....? years.(Round to two decimalplaces.)

The payback period of project B is ...? years.(Round to two decimalplaces.)

The payback period of project C is......? years.(Round to two decimalplaces.)

2.The NPV of project A is $.......?(Round to the nearestcent.)

The NPV of project B is $.....? (Round to the nearestcent.)

The NPV of project C is $(....?Round to the nearestcent.)

3.The IRR of

project A is ....?%(Round to two decimalplaces.)

The IRR of project B is ....?%(Round to two decimalplaces.)

The IRR of project C is ...?%(Round to two decimalplaces.)

4.Which project would yourecommend?(Select the best answerbelow.)

A. ProjectA

B. ProjectC

C. ProjectB