Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)

0 $424,000 $39,500

1 44,500 20,300

2 61,500 13,400

3 78,500 18,100

4 539,000 14,900

The required return on these investments is 11 percent.

Required: (a) What is the payback period for each project? (Do not round intermediate calculations. 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. 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. Enter your answers as a percentage 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. 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? (Click to select)Project B Project A_____ References