For each project, calculate the NPV$,$ IRR, profitability index $($PI$)$ and the payback period. For each capital budgeting decision tool, indicate if the project should be

accepted or rejected, assuming that each project is independent of the others.

Note: The venture capital folks, when considering payback period, have a firm maximum payback period of four years. This $4-$year payback period has no impact on other capital budgeting analysis techniques, each is to be considered on its own. In other words, yes, all cash flows need to be considered for NPV$,$ IRR, and PI$.$

Expected cash flows for the four potential projects that Baker is considering as shown below $($each project ends when its cash flows end$)$:

Year Project A Project B Project C Project D

$0-$$$7,000,000-$$$10,000,000-$$$12,000,000-$$$7,200,000$

$1$ $$2,250,000$ $$1,250,000$ $$2,000,000$ $$2,500,000$

$2$ $$2,250,000$ $$1,500,000$ $$3,500,000$ $$2,500,000$

$3$ $$2,100,000$ $$2,000,000$ $$5,000,000$ $$2,000,000$

$4$ $$1,500,000$ $$2,500,000$ $$3,500,000$ $$1,500,000$

$5$ $$500,000$ $$3,000,000$ $$2,500,000$ $$500,000$

$6$ $$500,000$ $$3,250,000$ $$1,500,000$ $$500,000$

$7$ $$500,000$ $$2,000,000$ $$1,000,000$

$8$ $$500,000$

$9$ $$500,000$

$10$ $$500,000$

Year Project A Project B Project C Project D

Req. Return $($use $2$ decimals xx$.$xx$\%)$

$4$a NPV $($to nearest $$1)$

$4$b NPV accept$/$reject

$5$a IRR $($xx$.$xx$\%)$

$5$b IRR accept$/$reject

$6$a PI $($show $2$ decimals, x$.$xx$)$

$6$b PI accept$/$reject

$7$a Payback Period $($x$.$x years$)$

$7$b Payback accept$/$reject