Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)

0 –$195,070 –$32,040

1 25,800 13,379

2 60,000 11,897

3 50,000 10,634

Whichever project you choose, if any, you require a 15 percent return on your investment.

Required:

(a) What is the payback period for Projects A and B? (Round your answers to 2 decimal places. (e.g., 32.16))

(b) What is the discounted payback period for Projects A and B? (Round your answers to 2 decimal places. (e.g., 32.16))

(c) What is the NPV for Projects A and B? (Do not include the dollar sign ($). Round your answers to 2 decimal places, (e.g., 32.16))

(d) What is the IRR for Projects A and B? (Do not include the percent sign (%). Round your answers to 2 decimal places. (e.g., 32.16))

(e) What is the profitability index for Projects A and B? (Round your answers to 3 decimal places. (e.g., 32.161))

(f) Based on your answers in (a) through (e), you will finally choose which project?

Year Cash Flow (A) Cash Flow (B)

0 –$195,070 –$32,040

1 25,800 13,379

2 60,000 11,897

3 50,000 10,634

Whichever project you choose, if any, you require a 15 percent return on your investment.

Required:

(a) What is the payback period for Projects A and B? (Round your answers to 2 decimal places. (e.g., 32.16))

(b) What is the discounted payback period for Projects A and B? (Round your answers to 2 decimal places. (e.g., 32.16))

(c) What is the NPV for Projects A and B? (Do not include the dollar sign ($). Round your answers to 2 decimal places, (e.g., 32.16))

(d) What is the IRR for Projects A and B? (Do not include the percent sign (%). Round your answers to 2 decimal places. (e.g., 32.16))

(e) What is the profitability index for Projects A and B? (Round your answers to 3 decimal places. (e.g., 32.161))

(f) Based on your answers in (a) through (e), you will finally choose which project?

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