Answer questions 3 and 4 on the basis of following project. Your firm has estimated the following cash flows for the capital investment project. The firm's required rate of return is 12%. Year Project Cash Flow 0 -$48.000 1 20,000 2 20,000 3 20,000 4 5,000 5 5.000 6 5,000 7 -5,000 What is the NPV of the project? a b 5,821 6,323 7.221 5,718 10,846 e Your firm is evaluating two mutually exclusive projects. Each project would have an initial outlay of $50,000. Project A would produce annual cash flows of $15.625 each year for 5 years. Project B would produce a single cash flow of S100.000 at the end of year 5. A 10% required rate of return is appropriate for each project. Which of the following is true? Project A should be accepted because it has the largest IRR. Project A should be accepted because it has the largest NPV. Project B should be accepted because it has the largest IRR. Project B should be accepted because it has the largest NPV. Project A should be accepted because it has the largest payback. a b OO d e a Question 11 (10 points) Which of the following is not a criticism of the payback period method? payback does not consider any required rate of return b payback cutoffs are subjective. payback does not account for the time value of money. Od payback deals with accounting profits rather than cash flows. payback does not consider all cash flows. C e