Problem #17. Comparing Investment Criteria

Comparing Investment Criteria [LO1, 2, 3, 5, 7] Consider the foll mutually exclusive projects: 17. the following Cash Flow (A) Cash Flow (B) Year 0 $455,000 58,000 85,000 85,000 572,000 -$65,000 31,000 28,000 25,500 19,000 2 4 Whichever project you choose, if any, you require a return of 11 percent on you investment. a. If you apply the payback criterion, which investment will you choose? Why? b. If you apply the discounted payback criterion, which investment will you choose Why? c. If you apply the NPV criterion, which investment will you choose? Why? d. If you apply the IRR criterion, which investment will you choose? Why? e. If you apply the profitability index criterion, which investment will you choose Why? Bnor wern ojet will ou lal lod Why