Consider the following cash flows:

C0					C1					C2					C3					C4
		$37			+	$	33			+	$	33			+	$	33					$66

1.Which two of the following rates are the IRRs of this project? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

2.5%

10.1%

14.3%

28.6%

40.0%

b,c &d. What is project NPV if the discount rates are 2%, 14%, 27%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your final answer to 3 decimal places.)

	Discount rate	NPV
b.	2%
c.	14%
d.	27%

2.

Consider the following projects:

Project	C0					C1					C2
A		$	2,200			+	$	2,100			+	$	1,300
B			2,200			+		1,540			+		1,748

a. Calculate the profitability index for A and B assuming a 23% opportunity cost of capital. (Do not round intermediate calculations. Round your answers to 4 decimal places.)

project	profitability index
A
B

b. According to the profitability index rule, which project(s) should you accept?

multiple choice

Project A

Project B

Both