Question
The Orange Corporation is trying to choose between the following two mutually exclusive online game projects. Assume the discount rate for the Orange Corporation is
The Orange Corporation is trying to choose between the following two mutually exclusive online game projects. Assume the discount rate for the Orange Corporation is 10 percent. Year Project A Project B 0 -40,000 -15,000 1 0 0 2 0 0 3 64,000 25,000 a) Calculate the profitability index for both projects. (4 points) b) Calculate the IRR for both projects. (4 points) c) Calculate the NPV for both projects. (2 points) d) If the two projects are independent, which project(s) should be chosen? Why? (2 points) e) If the two projects are mutually exclusive, which project should be chosen? Why? (3 points)
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