Rhine Tools Ltd., a renowned tool maker for sculpting, is considering four projects. Because of the company’s risk profile, it has a high cost of capital.

a. Calculate the NPV of each project, using a cost of capital of 16%.

b. Rank acceptable projects by NPV.

c. Calculate the IRR of each project, and use it to determine the highest cost of capital at which all the projects would be acceptable.

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Initial investment (CF) Year (t) 1 2 3 Project Z - 150,000 60,000 60,000 60,000 Project X -300,000 Project C - 240,000 Cash inflows (CFt) 105,000 150,000 150,000 60,000 120,000 180,000 Project V -540,000 300,000 240,000 180,000