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Here are the expected cash flows for three projects: Project Year: 4 0 - 6,500 - 2,500 - 6,500 Cash Flows (dollars) 2 3 +
Here are the expected cash flows for three projects: Project Year: 4 0 - 6,500 - 2,500 - 6,500 Cash Flows (dollars) 2 3 + 1,375 +1,375 + 3,750 0 +2,500 + 2,750 +1,375 +1,375 +3,750 mo 0 + 3,750 + 5,750 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 12%, 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 Year 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 12%, 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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