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(CLOS) Etisalat is in the process of choosing the better of two equal-risk, independent capital expenditure projects - A and B. The relevant cash flows
(CLOS) Etisalat is in the process of choosing the better of two equal-risk, independent capital expenditure projects - A and B. The relevant cash flows for each project are shown in the following table. The firm's cost of capital is 13%. Project A Project B Initial Investment $30000 $29000 $12,000 $12,000 2 $12,000 $10,000 3 $12,000 $9,000 4 $12,000 $8,000 Required: a. Calculate each project's payback period? b. Calculate the net present value (NPV) for each project? c. Calculate Profitability Index (Pl) for each project? d. Summarize the preferences dictated by each measure (Payback period, NPV,PI), and indicate which project you would recommend. Explain why
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