Question: Consider the following projects: Project Cash Flows ($) C 0 C 1 C 2 C 3 C 4 C 5 A 1,500 1,500 0 0

Consider the following projects:

Project Cash Flows ($)
C0 C1 C2 C3 C4 C5
A 1,500 1,500 0 0 0 0
B 3,000 1,500 1,500 4,500 1,500 1,500
C 3,750 1,500 900 0 1,500 1,500

If the opportunity cost of capital is 11%, which project(s) have a positive NPV?

Calculate the payback period for each project.

Which project(s) would a firm using the payback rule accept if the cutoff period is three years?

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