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Consider projects A and B with the following cash flows: A B Ce -$36 -58 C1 +$20 +25 C +$20 +25 C3 +$20 +25
Consider projects A and B with the following cash flows: A B Ce -$36 -58 C1 +$20 +25 C +$20 +25 C3 +$20 +25 a-1. What is the NPV of each project if the discount rate is 10 % ? (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which project has the higher NPV? b-1. What is the profitability Index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b-2. Which project has the higher profitability index? c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can raise? Answer is complete but not entirely correct. Project A a- 1. NPV of each project if the discount rate is 10% $ 13.74 $ Project B 12.17 2. Which project has the higher NPV? Project A b- 1. Profitability Index of each project $ 1.38 $ 1.24 b- 2. Which project has the higher profitability index? Project A L Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? Both d. Which project is most attractive to a firm that is limited in the funds it can raise? Project A
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