Marge Simpson Inc. has following business opportunities with following cash flow information. Assume Marge’s opportunity cost of capital is 12%.

Year	Project A	Project B
0	$20,000	$20,000
1	15,000	2,000
2	15,000	2,500
3	13,000	3,000
4	3,000	50,000

1. Calculate NPV for both projects.
2. Calculate IRR for both projects (Hint: the equation of calculating IRR).
3. Calculate profitability index for both projects.
4. Calculate payback period for both projects.
5. Which business opportunity is better? Use IRR_A=54.7%, IRR_B=33.3%, cross over point=14.1%. (Hint: provide your choice with different discount rate)

Answer rating: 100% (QA)

Evaluating Business Opportunities for Marge Simpson Inc Heres the analysis of both projects consider... View the full answer