Chapter 10 Problem Set (80 points) Problem 1: Capital Budgeting Techniques You are a financial analyst at the Humongous Project Company (HPC). HPC's weighted- average-cost-of-capital is 12 percent, and it uses a 4-year rule for payback analysis. Internal teams at HPC are proposing three different projects with the following projected cash flows: Year Project Alpha Project Beta Project Delta 0 ($110,000) ($128,000) $100,000) 41,000 291000 27.500 33.000 29.000 27.500 301000 29.000 27.500 24,000 40.000 27.500 201000 60.000 27.500 a. Calculate the payback period for projects Alpha Beta, and Delta. b. Calculate the NPV for each project using a cost of capital of from 0-20%, in 2% intervals. c. Draw the NPV profiles for each project (on the same graph). d Calculate the IRR. for each project. e. Calculate the Profitability Index (PI) for each project. f Assume that these projects are independent projects. Evaluate the acceptability of each project using the payback period, NPV, PI, and IRR. methods. g. Now assume that these projects are mutually exclusive. Rank the projects according to the payback period, NPV, and IRR methods. h. Do the rankings conflict? If so, which project would you recommend, and why