Consider projects A and B with the following cash flows:

C₀ C₁ C₂C₃

A $38+$22 +$22 +$22

B 63 32 32 32

a-1.What is the NPV of each project if the discount rate is 16%?(Do not round intermediate calculations. Round your answers to 2 decimal places.)

a-2.Which project has the higher NPV?

• Project A
• Project B

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?

• Project A
• Project B

c-1.Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects?

• Project A
• Project B

c-2.Which project is most attractive to a firm that is limited in the funds it can raise?

• Project A
• Project B
• Both