Expected after Tax Net Cash Flows, CF_t

Year Project A Project B

0 $(1,000) $(1,000)

1 $750 $100

2 $350 $250

3 $150 $450

4 $50 $750

1. Calculate the NPV for the two projects. Comment the results. (8 pts)
2. Calculate and analyze the IRR for the two projects. (8 pts)
3. Which Project has a lower payback period? (8 pts)
4. Calculate and comment the Profitability Index (PI) for the two projects (6 pts).