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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 423,000 $ 39,000 1 45,000 20,200 2 61,000 13,500

Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 $ 423,000 $ 39,000
1 45,000 20,200
2 61,000 13,500
3 78,000 17,600
4 538,000 14,400

The required return on these investments is 14 percent.

a. 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

b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Net present value
Project A $
Project B $

c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Internal rate of return
Project A $
Project B $

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

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