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i Data Table Initial outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 PROJECT A - $30,000 11,625

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i Data Table Initial outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 PROJECT A - $30,000 11,625 11,625 11,625 11,625 11,625 PROJECT B - $30,000 0 0 0 0 80,000 Print Done 3. The required rate of return on these projects is 8 percent. a. What is the payback period of project A? years (Round to two decimal places.) What is the payback period of project B? years (Round to two decimal places.) b. What is the NPV of project A? (Round to the nearest cent.) What is the NPV of project B? (Round to the nearest cent.) c. What is the IRR of project A? % (Round to two decimal places.) What is the IRR of project B? % (Round to two decimal places.) d. What has caused the ranking conflict? (Select the best choice below.) O A. The free cash flows genearted by the projects are different. OB. The projects evaluated have the same initial cash outlay. C. The NPV and IRR decision criteria have different reinvestment assumptions. D. The two projects are independent. e. Which project should be accepted? Why? (Select the best choice below.) e. Which project should be accepted? Why? (Select the best choice below) OA Project Ashould be chosen because the lower payback period. The payback period is preferred because it can be easily computed OB Project should be chosen because has higher NPV. The NPV criterion is preferred because it makes the most acceptable reinvestment assumption for the weath-maximizing im OC. Project A should be chosen because it has higher IRR. The IRR criterion is preferred because makes the most acceptable reinvestment assumption for the wealth-makimiring firm D. Neither project A nor should be chosen because ranking conflict exists among different decision criteria Diferent decision criteria should yield the same result

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