Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow Cash Flow (A) (B) $355,000 547,500 40,000 23,500 60,000 21,500 60,000 19.000 435.000 14.100 Whichever project you choose, if any, you require a 15 percent return on your investment. a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Payback period Project A 3.45 years Project B 2.13 years 3-2 If you apply the payback criterion, which investment will you choose? Project A Project B b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32.16.) Discounted payback period Project A years Project B years b-2 If you apply the discounted payback criterion, which investment will you choose? Project A Project B C-1 What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32. 16.) NPV Project A Project B c-2 \f you apply the NPV criterion, which investment will you choose? Project A Project B d-1 What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.) IRR Project A Project B % Project A Project B b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32.16.) Project A Project B Discounted payback period years years b-2# you apply the discounted payback criterion, which investment will you choose? Project A Project B C-1 What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A Project B NPV $ $ c-2 If you apply the NPV criterion, which investment will you choose? Project A Project B d-1 What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.) IRR Project A Project B d-2 If you apply the IRR criterion, which investment will you choose? Project A Project B 6-1 What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Profitability index Project A Project B 6-2 If you apply the profitability index criterion, which investment will you choose? O Project A Project B 1. Based on your answers in (a) through (e), which project will you finally choose? (Click to select)
