Question: Bitforth Co. is considering two projects, but can afford only one. They require a 15% return on their investment. Show your work for each step.

Bitforth Co. is considering two projects, but can afford only one. They require a 15% return on their investment. Show your work for each step. (15 marks) Year Project A cashflow Project B cashflow 0 -$350,000 -$50,000 1 45,000 24,000 2 65,000 22,000 3 65,000 19,500 4 440,000 14,600 Using the payback method, which project would you choose? Why? Using the NPV method, which project would you choose? Why? Using the IRR method, which project would you choose? Why? If you apply the profitability index, which project would you choose? Why? Which project should you choose? Why

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