A firm has the following investment alternatives. Each costs $13,000 and has the following cash inflows.

Investment A is considered to be typical of the firm€™s investments. Investment B€™s cash flows vary over time but are considered to be less certain. Investment C€™s cash flows diminish over time but because most of the cash flows occur early in the investment€™s life, they are considered to be more certain. The firm€™s cost of capital is 10 percent, but the financial manager uses a hurdle rate of 8 percent for less-risky projects and 12 percent for riskier projects.
a. Based on the cost of capital, should any of the investments be made?
b. If the financial manager uses a risk-adjusted cost of capital, should any of the investments be made?
c. Would the answers to a and b be different if the three investments were mutually exclusive?

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Year Flow $4,300 3,500 4,800 $4,300 5,000 6,000 4,300 4,500 3,000 $4,300 4,000 2,000