BYD automotive must choose between two directions for the automakers future:developing fully electric-powered car or a hybrid-powered car. The company has $30million capital available at a cost of capital of 10%. The $30 million capital needs to bepaid back in 3.5 years.A) The hybrid car project calls for investment of $10 million to build plant and assemblylines right now. For the next four years, the project cash flow from the project will be $5million, $3 million, $3.5 million, and $3.5 million, respectively. After that, the project willbe close down with no salvage value. B)The electric car project calls for $20 million investment to purchase patents andanother $10 million to build plant and assembly lines right now. For the next four years,the project cash flow from the project will be $15 million, $9 million, $9 million, and $11million, respectively. After that, the project will be close down with no salvage value.

Use the above information, fill the table of cash flow (careful about positive or negative sign of the cash flow) for each project.

2).Based on the capital budgeting decision rules, calculate the Payback Period (PB),Discounted Payback Period (DPB), Net Present Value (NPV), and ProfitabilityIndex (PI) for each project.

3)Use Excel function to calculate the Internal Rate of Return (IRR) for both projects.

4)Would each of the projects be taken if it was the onlyproject available? Explain.

5)Can BYD take both of the two projects? If not, which one of the decision criteria listed in part 2) and 3) (PB, DPB, NPV, PI, IRR) will you use for the final decision? Which project should BYD take?

6)Analyze each alternative decision criteria listed in part 2) and 3) by identifying the pros and cons of each. (Textbook might help)

1) Use the above information, fill the table of cash flow (careful about positive or negative sign of the cash flow) for each project. Project Hybrid Car Project Electric Car Cash Flow Cash Flow Year Year 0 0 1 1 2 2 3 4 4