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Consider this project with an internal rate of return of 28.0%. The following are the cash flows of the project. Year Cash Flow +$160 -115

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Consider this project with an internal rate of return of 28.0%. The following are the cash flows of the project. Year Cash Flow +$160 -115 0 1 2 -115 a. What is project NPV if the discount rate is 17%? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV b. Should you accept the project? Yes No Consider the following projects: Project A B -$3,100 - 3,100 C1 +$3,000 + 2,440 C2 +$2,200 + 1,928 a. Calculate the profitability index for A and B assuming a 26% opportunity cost of capital. (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project Profitability index A b. According to the profitability index rule, which project(s) should you accept? Project A O Project B O Both O Neither Here are the expected cash flows for three projects: Year: 3 Project A B C 5,500 - 1,500 5,500 Cash Flows (dollars) 1 2 + 1,125 + 1,125 + 3,250 + 1,500 + 2,250 + 1,125 + 1,125 + 3,250 4 0 + 3,250 + 5,250 a. What is the payback period on each of the projects? b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept? d-1. If the opportunity cost of capital is 11%, calculate the NPV for projects A, B, and C. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.) d-2. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false? Project A Years Project B Years Project C Years a. Payback period b. If you use the payback rule with a cutoff period of 2 years, which projects will you accept? c. If you use a cutoff period of 3 years, which projects will you accept? d-1. If the opportunity cost of capital is 11%, calculate the NPV for projects A, B, and C. d-2. Which projects have positive NPVs? e. "Payback gives too much weight to cash flows that occur after the cutoff date." True or false

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