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Consider the following two projects: Cash flows Co ci C2 C) C4 Project A Project B -$110 -$110 42 53 42 53 42 53 42

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Consider the following two projects: Cash flows Co ci C2 C) C4 Project A Project B -$110 -$110 42 53 42 53 42 53 42 a. If the opportunity cost of capital is 10%, 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 10%. c. Which one would you choose if the cost of capital is 15%? 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 in this case give the same answer as NPV? h-1. If the opportunity cost of capital is 10%, 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? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B Reqc Reg D ReqE ReqF Req G ReqH1 Reg H2 Req H3 If the opportunity cost of capital is 10%, what is the profitability index for each project? (Round your answers to 2 decimal places.) Project A Project B Profitability Index 1.20 X 1.21 X

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