Consider the following projects a company can invest in: The cost of capital is 9%. (a) Calculate the NPV for each project. Which project would you choose if the projects were independent? Which project would you choose if they were mutually exclusive? (6 marks) (b) In capital budgeting and investment planning, the payback period method is commonly use and yet, it is considered to be inferior to the discounted cash flow method. Explain this statement. (3 marks) (c) Calculate the payback period for each project. Which project would you choose based on this method? (6 marks) (d) The Payback Period method is often criticised, but it also has its merits. Explain why it can be desirable to focus on fast paybacks. (3 marks) (e) Calculate the profitability index for each project. Which project would you choose? (6 marks) (f) Your total investment budget is $1,500. Which combination of projects would you choose based on the NPV method? Which combination of projects would you choose based on the profitability index method? Clearly explain your choice(s). (6 marks)

Consider the following projects a company can invest in: CF 0 1 2 3 4 5 A -150 60 60 60 60 60 B -750 0 0 0 0 1500 -525 330 150 75 45 300 D -630 30 75 75 150 900 The cost of capital is 9% (a) Calculate the NPV for each project. Which project would you choose if the projects were independent? Which project would you choose if they were mutually exclusive? (6 marks) (b) In capital budgeting and investment planning, the payback period method is commonly use and yet, it is considered to be inferior to the discounted cash flow method." Explain this statement. (3 marks) (c) Calculate the payback period for each project. Which project would you choose based on this method? (6 marks) (d) The Payback Period method is often criticised, but it also has its merits. Explain why it can be desirable to focus on fast paybacks. (3 marks) (e) Calculate the profitability index for each project. Which project would you choose? (6 marks) (1) Your total investment budget is $1,500. Which combination of projects would you choose based on the NPV method? Which combination of projects would you choose based on the profitability index method? Clearly explain your choice(s). (6 marks)