Consider the following two projects:

a$.$ If the opportunity cost of capital is $11\%,$ which of these two projects would you accept $($A$,$ B$,$ or both$)?$

b$.$ Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still $11\%.$

c$.$ Which one would you choose if the cost of capital is $16\%?$

d$.$ What is the payback period of each project?

e$.$ Is the project with the shortest payback period also the one with the highest NPV$?$

f$.$ What are the internal rates of return on the two projects?

g$.$ Does the IRR rule in this case give the same answer as NPV$?$

h$-1.$ If the opportunity cost of capital is $11\%,$ what is the profitability index for each project?

h$-2.$ Is the project with the highest profitability index also the one with the highest NPV$?$

h$-3.$ Which measure should you use to choose between the projects?

Complete this question by entering your answers in the tabs below.

Which projects would you accept?