Question
Consider projects A and B with the following cash flows: C 0 C 1 C 2 C 3 A $ 27 + $ 16 +
Consider projects A and B with the following cash flows:
C0 | C1 | C2 | C3 | ||||||||||||||||||||
A | $ | 27 | + | $ | 16 | + | $ | 16 | + | $ | 16 | ||||||||||||
B | 52 | + | 27 | + | 27 | + | 27 | ||||||||||||||||
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?
I need help with B-1. Please and thank you!!!
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