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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 352,000 $ 49,000 1 43,000 23,800 2 63,000 21,800
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) | |||||
| 0 | $ | 352,000 | $ | 49,000 | |||
| 1 | 43,000 | 23,800 | |||||
| 2 | 63,000 | 21,800 | |||||
| 3 | 63,000 | 19,300 | |||||
| 4 | 438,000 | 14,400 | |||||
| Whichever project you choose, if any, you require a 15 percent return on your investment. What is the payback period for each project? If you apply the payback criterion, which investment will you choose? What is the discounted payback period for each project? What is the NPV for each project? What is the IRR for each project? What is the profitability index for each project?
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