Running head: FINANCIAL ACCOUNTING
Financial Accounting Solutions Manuals
If the opportunity cost of capital is 11%, and you have unlimited access to the capital, which
one(s) would you accept? What would be your action if the cost of capital is 16%?
Suppose that you have limited access to the capital and you need to choose only one
project. Which one would you choose? The discount rate is still 11%.
What is the payback period of each project? Please analyse if in general decision based on
payback is consistent with decision based on NPV.
What are the internal rates of return (IRR) on the three projects? Does the IRR rule in this
case give the same decision as NPV?
If the opportunity cost of capital is 11%, what is the profitability index for each project?
Please analyse if in general decisions based on profitability index is consistent with decisions
based on NPV.
What is the most generally accepted measure to choose between the projects? Please justify