Question: Consider the following two mutually exclusive projects: Whichever project you choose, if any, you require a 13 percent return on your investment. a. If you

Consider the following two mutually exclusive projects:

Whichever project you choose, if any, you require a 13 percent return on your investment.
a. If you apply the payback criterion, which investment will you choose? Why?
b. If you apply the NPV criterion, which investment will you choose? Why?
c. If you apply the IRR criterion, which investment will you choose? Why?
d. If you apply the profitability index criterion, which investment will you choose? Why?
e. Based on your answers in (a) through (d), which project will you finally choose?Why?

Year Cash Flow A Cash Flow B (S415,000 (535,000) 49,000 57,000 74,000 530,000 19,400 14,300 13.600 10,400

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aComputation of the Payback Periodof given projects Year Cash Flow A Cummulative Cash flow Cash Flow B Cummulative Cash flow 0 415000 35000 1 49000 49... View full answer

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