Question: 9. Consider the following three projects for Ralco Co. This company is in pharmaceutical industry. It currently sells several drugs, including pain reliever and cough
9. Consider the following three projects for Ralco Co. This company is in pharmaceutical industry. It currently sells several drugs, including pain reliever and cough medicine. Project A is considered the safest project of these three, while Project is the riskiest one. There are three discount rates for the capital budgeting: 8 percent for Project A, 12 percent for Project B, and 19 percent for Project C. Period T=0 T=1 T=2 T=3 T=4 T=5 T=6 T=7 TEB T=9 Project A (S10,000) $2,000 $1.900 $1,900 $2,500 $2,500 $1,800 $1,800 $1,800 S1.800 Project B (S12.000) $2,900 S1.900 S1,900 $1.900 S2,900 $2,900 S2.900 $3,900 $4.900 Project C ($17.000) $1,900 $1,900 S1,900 $1,900 $1,900 $3.900 $3,900 $3,900 $6.900 A) If you have to choose only one project under the Payback Period, which project should be chosen and explain WHY? (4 points) B) When you have only $20,000 to support the above projects, which project for projects) should be chosen under the Net Present Value (NPV) and explain WHY? (4 points)
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