Question: Cash flows C1 C2 C3 C4 Project A Project B -$290 -$290 125 153 125 153 125 153 125 a. If the opportunity cost of


Cash flows C1 C2 C3 C4 Project A Project B -$290 -$290 125 153 125 153 125 153 125 a. If the opportunity cost of capital is 10%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 10%. c. Which one would you choose if the cost of capital is 15%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h-1. If the opportunity cost of capital is 10%, what is the profitability index for each project? h-2. Is the project with the highest profitability index also the one with the highest NPV? h-3. Which measure should you use to choose between the projects? Complete this question by entering your answers in the tabs below. Req A Req B Req C Req D Req E ReqF Req G Reg H1 Req H2 Req H3 What are the internal rates of return on the two projects? (Enter your answers as a percent rounded to the nearest whole number.) Project A % Project B % IRR Cash flows Co Ci C2 C3 C4 Project A Project B -$290 -$290 125 153 125 153 125 153 125 a. If the opportunity cost of capital is 10%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 10%. c. Which one would you choose if the cost of capital is 15%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h-1. If the opportunity cost of capital is 10%, what is the profitability index for each project? h-2. Is the project with the highest profitability index also the one with the highest NPV? h-3. Which measure should you use to choose between the projects? Complete this question by entering your answers in the tabs below. Req A Req B ReqC Reg D Req E Reg F Req G Req H 1 Req H2 Req H3 If the opportunity cost of capital is 10%, what is the profitability index for each project? (Round your answers to 2 decimal places.) Project A Project B Profitability Index
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