Botany Bay, Inc., a maker of casual clothing, is considering four projects shown in the following table

Project A Project B Project C Project D

Initial investment $50,200 $99,600 $80,300 $179,700 Year Cash inflows 1 $20,100 $36,400 $21,000 $99,200 2 $20,100 $52,000 $41,000 $79,600 3 $20,100 $50,600 $60,100 $59,100

Because of past financial difficulties, the company has a high cost of capital at 14.5%.

a.Calculate the NPV of each project, using a cost of capital of 14.5%.

b.Rank acceptable projects by NPV.

c.Calculate the IRR of each project and use it to determine the highest cost of capital at which all of the projects would be acceptable.