Consider the following two mutually exclusive projects:

Year 0- Cash Flow A $ 346,000 Cash Flow B $ 48,000

Year 1 Cash Flow A $49,000 Cash Flow B $24,400

Year 2 Cash Flow A $69,000 Cash Flow B $22,400

Year 3 Cash Flow A $69,000 Cash Flow B $19,900

Year 4 Cash Flow A $444,000 Cash Flow B $15,000

Whichever project you choose, if any, you require a return of 16 percent on your investment.

a-1 What is the payback period for each project?

a-2 If you apply the payback criterion, which investment will you choose?

b-1 What is the discounted payback period for each project?

b-2 if you apply the discounted payback criterion, which investment will you choose?

c-1 What is the NPV for each project?

c-2 if you apply the NPV criterion, which investment will you choose?

d-1 What is the IRR for each project?

d-2 if you apply the IRR criterion, which investment will you choose?

e-1 What is the profitability index for each project?

e-2 if you apply the profitability index criterion, which investment will you choose?

f. Based on your answers in (a) through (e), which project will you finally choose?