Comparing Investment Criteria (L01, 2, 3, 5, 7) Consider the following two mutually exclusive projects:

Year: 0 1 2 3 4

Cash Flow (A): -$350,000

45,000

65,000

65,000

440,000

Cash Flow (B) -$50,000

24,000

22,000

19,500

14,600

Whichever project you choose, if any, you require a 15% return on your investment

a. If you apply the payback criterion, which investment will you choose? Why?

b. If you apply the discounted payback criterion, which investment will you choose? Why?

c. If you apply the NPV criterion, which investment will you choose? Why?

d. If you apply the IRR criterion, which investment will you choose? Why?

e. If you apply the profitability index criterion, which investment will you choose? Why? f. Based on your answers in