Question: Consider the following projects: Project Co C1 C2 C3 C4 A -1000 +600 +200 +200 +1000 BOD -1000 +200 +200 +600 +1000 C -1300

Consider the following projects: Project Co C1 C2 C3 C4 A -1000

Consider the following projects: Project Co C1 C2 C3 C4 A -1000 +600 +200 +200 +1000 BOD -1000 +200 +200 +600 +1000 C -1300 +100 +100 +100 +1600 ID -1300 0 +300 +300 +1600 a) b) Calculate the payback period for each project. Explain the pitfalls of this method.(5) If the standard payback period is 2 years, which project will you select? Will our answer be different if the standard payback period is 3 years. (5) c) If the cost of capital is 10%, compute the discounted payback for each project?Which projects will you recommend if the standard payback period is 2 years, 3 years (5) d) Compute the NPV of each project? Which projects will you recommend?(5)

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