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Use the following information for the remaining questions: Project A: Initial Investment: $600 Cash Flows in Years 1 4: $240,$190,$160,$120 Project B: Initial Investment: $400
Use the following information for the remaining questions: Project A: Initial Investment: $600 Cash Flows in Years 1 4: $240,$190,$160,$120 Project B: Initial Investment: $400 Cash Flows in Years 1 4: $180,$150,$120,$110 Cost of capital is 14% for both projects. Q3. For each of the projects, determine whether we should accept it using the NPV rule. Q4. For each of the projects, determine whether we should accept it using the IRR rule. Q5. Find the profitability index for each project. Q6. Find the payback period for each of the projects. According to discussions that we've had in class, which project is superior? Q7. Suppose now the two projects are mutually exclusive. Which projects should we accept according to the NPV and IRR rules? Q8. Suppose now the two projects are contingent. Which projects should we accept according to the NPV and IRR rules
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