Question: Consider the following two mutually exclusive projects: The required rate of return is for both projects is 12% a) Calculate the NPV for both projects.

Consider the following two mutually exclusive projects:

Consider the following two mutually exclusive projects: The required rate of return

The required rate of return is for both projects is 12% a) Calculate the NPV for both projects. b) Calculate the Profitability index (PI) for both projects. c) Calculate the Payback period for both the projects. d) Based on the criterions above, which project would you advise be chosen? Why?

Year Cash flows (A) Cash Flows (B) 0 -350 000 -600 000 1 160 000 250 000 2 130 000 240 000 3 150 000 220 000 4 110 000 210 000

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