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Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount C/F C/F

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Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount C/F C/F C/F C/F C/F C/F C/F C/F Rate Alpha - 79 20 25 30 35 40 NA NA 15% Beta - 80 25 25 25 25 25 25 25 16% Assume that projects Alpha and Beta are mutually exclusive. The correct investment decision and the best rationale for that decision is to O A invest in project Alpha, since NPV Beta 0. OC. invest in project Beta, since NPV Beta > NPV Alpha > 0. OD. invest in project Beta, since IRR, >IRRA Consider the following two projects: Project Year 0 Year 1 Year 2 Year 3 Year 4 Cash Flow Cash Flow Cash Flow Cash Flow Cash Flow - 100 40 50 60 NA -73 30 30 30 Discount Rate 0.14 0.14 30 The profitability index for project A is closest to: O A. 0.21 OB. 14.06 OC. 0.14 OD. 28.12

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