CAN YOU PLEASE answer THIS TWO QUESTION THANK YOU

2. 2: The Basics of Capital Budgeting: NPV , and it is the best selection criterion. The larger the NPV, the more value the project adds; and added value means a higher stock price. In equation The net present value (NPV) method estimates how much a potential project will contribute to shareholders' wealth form, the NPV is defined as: NPV = CF. + CF: + CF +...+ CTy N CF 40 (1 + r) 7. When the firm is CFt is the expected cash flow at Time t, r is the project's risk-adjusted cost of capital, and N is its life, and cash outflows are treated as negative cash flows. The NPV calculation assumes that cash inflows can be reinvested at the project's risk-adjusted WACC considering independent projects, if the project's NPV exceeds zero the firm should accept the project. When the firm is considering mutually exclusive projects, the firm should accept the project with the highest positive NPV. Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 7% 340 Project A Project B -1,160 -1,160 670 270 335 270 290 440 790 What is Project A's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. What is Project B's NPV? Do not round intermediate calculations. Round your answer to the nearest cent. If the projects were independent, which project(s) would be accepted? -Select- If the projects were mutually exclusive, which project(s) would be accepted? -Select- 4. 6: The Basics of Capital Budgeting: Payback Payback period was the earliest -Select- selection criterion. The -Select- is a "break-even" calculation in the sense that if a project's cash flows come in at the expected rate, the project will break even. The equation is: Number of Unrecovered cost at start of year Payback = years prior to + Cash flow during full recovery year full recovery The -Select- a project's payback, the better the project is. However, payback has 3 main disadvantages: (1) All dollars received in different years are given -Select- 7 weight. (2) Cash flows beyond the payback year are ignored. (3) The payback merely indicates when a project's investment will be recovered. There is no necessary relationship between a given payback and investor wealth maximization. costs. However, the discounted payback still disregards cash flows - Select the payback year. In addition, there is no specific payback rule to A variant of the regular payback is the discounted payback. Unlike regular payback, the discounted payback considers - Select justify project acceptance. Both methods provide information about -Select- and risk. Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%. 400 Project A Project B -1,050 -1,050 650 250 210 360 260 710 335 What is Project A's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project A's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's payback? Do not round intermediate calculations. Round your answer to four decimal places. years What is Project B's discounted payback? Do not round intermediate calculations. Round your answer to four decimal places. years