For the following projects Machine A, Machine B, or Machine C. The Firms cost of capital is 12%. Cash flows are as follows:

Investment

Year A B C

0 -50000 -60000 -70000

1 15000 12000 50000

2 15000 18000 30000

3 15000 36000 20000

4 15000 48000 10000

5 15000 5000

(a) Calcuate Net Present Value of each project.

(b) Using NPV, evaluate the acceptability of each project.

(c) Rank projects from best to worst using NPV. If projects were not mutually exclusive, what would you do? If they were mutually exclusive, what would you do?

(d) Rank projects from best to worst using PI.

(e) What is the payback period for each project, and what is the order of best to worst?