Parkallen Inc. has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$36, 350 17, 120 15, 240 12,140 8,040 Cash Flow (B) -$36,350 7,100 12,600 18,000 20,160 a-1. What is the IRR for each of these projects? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Project A Project B IRR 19.021 18.08 a-2. Using the IRR decision rule, which project should the company accept? Project A O Project B a-3. Is this decision necessarily correct? O Yes O No b-1. If the required return is 11%, what is the NPV for each of these projects? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) NPV $ Project A Project B $ b-2. Which project will the company choose if it applies the NPV decision rule? Project A Project B c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discount rate % An investment project has annual cash inflows of $7,200, $6,800, $7,600, and $8,900, and a discount rate of 14%. What is the discounted payback period for these cash flows if the initial cost is $9,150? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $13,115? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $17,080? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$537,000 138,000 158,000 83,000 469,000 Cash Flow (B) -$104,000 42,000 40,000 37,500 32,600 Whichever project you choose, if any, you require a 15% return on your investment. a-1. What is the payback period for each project? (Round the final answers to 2 decimal places.) Project A Project B Payback Period years years a-2. If you apply the payback criterion, which investment will you choose? O Project A O Project B b-1. What is the discounted payback period for each project? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Discounted Payback Period years Project A Project B years b-2. If you apply the discounted payback criterion, which investment will you choose? Project A O Project B C-1. What is the NPV for each project? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) Project A Project B NPV $ $ c-2. If you apply the NPV criterion, which investment will you choose? O Project A O Project B d-1. What is the IRR for each project? (Round the final answers to 2 decimal places.) IRR Project A Project B d-2. If you apply the IRR criterion, which investment will you choose? O Project A O Project B e-1. What is the profitability index for each project? (Do not round intermediate calculation. Round the final answers to 3 decimal places.) Profitability Index Project A Project B e-2. If you apply the profitability index criterion, which investment will you choose? O Project A Project B f. Based on your answers in (a) through (e), which project will you finally choose? Project A O Project B Parkallen Inc. has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$36, 350 17, 120 15, 240 12,140 8,040 Cash Flow (B) -$36,350 7,100 12,600 18,000 20,160 a-1. What is the IRR for each of these projects? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Project A Project B IRR 19.021 18.08 a-2. Using the IRR decision rule, which project should the company accept? Project A O Project B a-3. Is this decision necessarily correct? O Yes O No b-1. If the required return is 11%, what is the NPV for each of these projects? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) NPV $ Project A Project B $ b-2. Which project will the company choose if it applies the NPV decision rule? Project A Project B c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discount rate % An investment project has annual cash inflows of $7,200, $6,800, $7,600, and $8,900, and a discount rate of 14%. What is the discounted payback period for these cash flows if the initial cost is $9,150? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $13,115? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years What is the discounted payback period for these cash flows if the initial cost is $17,080? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discounted payback period years Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$537,000 138,000 158,000 83,000 469,000 Cash Flow (B) -$104,000 42,000 40,000 37,500 32,600 Whichever project you choose, if any, you require a 15% return on your investment. a-1. What is the payback period for each project? (Round the final answers to 2 decimal places.) Project A Project B Payback Period years years a-2. If you apply the payback criterion, which investment will you choose? O Project A O Project B b-1. What is the discounted payback period for each project? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Discounted Payback Period years Project A Project B years b-2. If you apply the discounted payback criterion, which investment will you choose? Project A O Project B C-1. What is the NPV for each project? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) Project A Project B NPV $ $ c-2. If you apply the NPV criterion, which investment will you choose? O Project A O Project B d-1. What is the IRR for each project? (Round the final answers to 2 decimal places.) IRR Project A Project B d-2. If you apply the IRR criterion, which investment will you choose? O Project A O Project B e-1. What is the profitability index for each project? (Do not round intermediate calculation. Round the final answers to 3 decimal places.) Profitability Index Project A Project B e-2. If you apply the profitability index criterion, which investment will you choose? O Project A Project B f. Based on your answers in (a) through (e), which project will you finally choose? Project A O Project B