Your firm faces the following investment alternatives, and can only select one project

Project A Project B. Project C. Project D. Project E

Time 0. -10,000. -10,000. -10,000. -10,000. -10,000

Time 1. 5,000. 4,000. 3,000. 4,000. 2,000

TIme 2. 4,000. 3,000. 4,000. 4,000. 6,000

Time 3. 3,000. 10,000. 5,000. 4,000. 10,000

a) Calculate the payback period for each project. If your company wants the shortest payback period

possible, which project should you choose.

b) Calculate the IRR for each project. Which project should you choose?

c) Calculate the NPV for each project if the cost of capital is 8 percent. Which project should you choose?

For b and c show answer as follows CF0 equals x, CO1 equals y, F01 equals z