The subject is Financial Management

(a) Consider the results from analyzing the following five projects: Project BB CC DD EE Investment/outlay Profitability Index $300,000 1.033 400,000 1.050 200,000 1.050 100,000 1.100 200,000 0.925 Suppose there is a limit on the capital budget of $600,000. Find the NPV for each project and determine which projects should be invested in, given that capital budget and what will be the total NPV? (8 marks) (b) You are evaluating an investment project, Project XX, which requires an initial investment of $100,000 and has the following cash flows: Period 1 2 3 4 Cash Flow $135,000 $35.000 $35,000 -$35,000 Calculate the following: (i). Calculate the payback period. (2 marks) (ii) Discounted payback period, assuming a 10% cost of capital. (4 marks) (iii). Net present value