Payback and NPV Insos Corporation has three projects under consideration. The cash flows for each project appear in the following table. The cost of capital for Insos is 14%. Year (t) Initial investment (CF) Year (t) 1 2 3 Project X Project Y Project Z - 120,000 - 120,000 - 120,000 Cash inflows (CF) 39,000 21,000 57,000 39,000 30,000 48,000 39,000 39,000 39,000 39,000 48,000 30,000 39,000 57,000 21,000 4 5 a. b. Calculate each project's payback period. Which project is preferred? Calculate each project's net present value (NPV). Which project is preferred according to this method? Comment on your findings in parts a and b, and recommend the best project. c. NPV: Mutually exclusive projects The BMW Group is considering the replacement of one of its car-manufacturing robot lines. Three alternative replacement robot lines are under consideration. The relevant cash flows associated with each line are shown in the following table. The firm's cost of capital is 15%. Robot line A - 850,000 Robot line C - 1,500,000 Initial investment (CF) Year (t) 1 Robot line B -600,000 Cash inflows (CF) 120,000 140,000 160,000 180,000 200,000 250,000 3 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 4 5 800,000 300,000 200,000 200,000 200,000 300,000 400,000 500,000 6 7 8 a. b. c. Calculate the net present value (NPV) of each line. Using NPV, evaluate the acceptability of each line. Rank the lines from best to worst, using NPV. Calculate the profitability index (PI) for each line. Rank the lines from best to worst, using PI. d. e