Project C0 C1 C2 C3 C4 C5

A -2000 +2000 0 0 0 0

B -3000 +2000 +1000 +2000 +1000 0

C -4000 +0 +2000 +1000 +1000 +3000

1. If the opportunity cost of capital is 12%, which projects have positive NPVs? Which

projects would a firm accept using the NPV rule?

2. Calculate the payback period of each project. Which project(s) would a firm using the

payback rule accept if the cutoff period were three years?