Provide an evaluation of two proposed projects, both with 5-year expected lives and identical initial outlavs of $110,000. Both of these projects involve additions to Caledonia's highly successful Avalon product line, and as a result, the required rate of return on both projects has been established at 15 percent. The expected free cash flows from each project are shown in the popup window: t In evaluating these projects, please respond to the following questions:

1. Why is the capital-budgeting process so important?
2. Why is it difficult to find exceptionally profitable projects?
3. What is the payback period on each project? If Caledonia imposes a 3-year maximum acceptable payback period, which of these projects should be accepted?
4. What are the criticisms of the payback period?
5. Determine the NPV for each of these projects. Should either project be accepted?

. Describe the logio behind the NPV

1. Determine the P/ for each of these projects. Should either project be accepted?
2. Would you expect the IPV and PI methods to give consistent

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