Capital Budgeting. please answer as fast as possible
You are the investment manager of an appliance company. The industry is currently in the expansion phase and the CEO of your company would like to capture as much of the market as possible. There are two mutually exclusive projects being proposed to your company and as the investment manager, one of your tasks is to evaluate whether or not these projects are worth pursuing. Provided below is the summary of the two project proposals: Year Project A Project B 0 (200,000 200,000 1 80,000 100,000 2 80,000 100,000 3 80,000 100,000 4 80,000 In order for you to analyze which of these projects is more worthy to be pursued, you are to perform capital budgeting where you are to evaluate and select long-term investments that are consistent with the firm's goal of maximizing its profit. Answer the following questions in a sentence format and provide computations. 1. If the opportunity cost of capital is 11%, which of these projects is worth pursuing? (3 points if fully explained, 2 points if explained partially, 1 point if missed the main points, 0 point if the answer is off tangent; 1 point for the computation, 1 point for the answer) 2. Suppose that only one of these two projects is to be chosen, which project is more favorable to the firm given that the cost of the capital remains at 11%? What are your bases in choosing which project is to be pursued? (3 points if fully explained, 2 points if explained partially, 1 point if missed the main points, 0 point if the answer is off tangent) 3. Which project would you choose if the opportunity cost of the capital has increased to 16%? (3 points if fully explained, 2 points if explained partially, 1 point if missed the main points, 0 point if the answer is off tangent; 1 point for the computation, 1 point for the answer) 4. Aside from the NPV, one strategy in capital budgeting is through payback method. Using this method, what is the payback period for each project? What does the payback period reveal about the two project proposals? (3 points if fully explained, 2 points if explained partially, 1 point if missed the main points, 0 point if the answer is off tangent; 1 point for the computation, 1 point for the answer)