Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)

0 $ 340,000 $ 51,500

1 -55,000--25,000

2 75,000--23,000

3 75,000 - 20,500

4 450,000-15,600

Whichever project you choose, if any, you require a 16 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 years Project B years

a-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 ProjectA $ Project B

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?

e-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-

e-2 If you apply the profitability index criterion, which investment will you choose? Project B Project A