SHOW YOUR CALCULATIONS FOR #18-#25. 18. What is the net present value of a project that has an initial cash outflow of $33,500 and the following cash inflows? The required return is 14%. Year Cash Flow 1 + $13,000 2 0 3 + $20,800 4 + $15,500 19. You are considering the following two mutually exclusive projects. The required rate of return is 14.5% for project A and 13.7% for project B. Which project should you accept and why? Year Project A Project B 0 - $50,000 - $50,000 1 + $25,000 + $41,000 2 + $36,000 + $20,000 3 + $21,000 + $10,000 20. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14%? Why or why not? Year Cash Flow 0 - $26,200 1 + $11,800 2 0 3 + $24,900 21. You are considering two independent (not mutually exclusive) projects both of which have been assigned a discount rate of 15%. Based on the profitability index, what is your recommendation concerning these projects? Project A Project B Year Cash Flow Year Cash Flow 0 - $46,000 0 - $50,000 1 + $32,000 1 + $18,000 2 + $27,000 2 + $54,000 22. You are considering a project with an initial cost of $7,800. What is the payback period for this project if the cash inflows are $1,100, $1,640, $3,800, and $4,500 a year over the next four years, respectively? 23. A project produces annual net income of $46,200, $51,800, and $62,900 over its 3-year life, respectively. The initial cost of the project is $675,000. This cost is depreciated straight-line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 14.5%? You are analyzing a project and have gathered the following data: Year Cash Flow 0 - 175,000 1 56,400 2 61,800 3 72,000 4 75,000 Required payback period 2.5 years Required AAR 11.5% Required return 14.5% 24. Based on the net present value of _____, you should _____ the project: 25. Based on the payback period of _____ years for this project, you should _____ the project