Question: Consider the following two mutually exclusive projects. Whichever project you chose, if any, you require a return of 12% on your investment. If you apply

Consider the following two mutually exclusive projects. Whichever project you chose, if any, you require a return of 12% on your investment.

If you apply the payback criteria, which investment will you choose?
If you apply the NPV criteria, which investment will you choose?
If you apply the IRR criteria, which investment will you choose?
If you apply the profitability index criteria, which investment will you choose?
Which project would you finally choose? Why?

4. Consider the following two mutually exclusive projects. Whichever project you chose, if any, you require a return of 12% on your investment. (50 POINTS) Year 0 1 Cash Flow A -$300,000 $46,000 $85,000 $250,000 $100,000 Cash Flow B -$77,000 $35,000 $65,000 $25,000 $41,500 2 3 4 a. If you apply the payback criteria, which investment will you choose? b. If you apply the NPV criteria, which investment will you choose? c. If you apply the IRR criteria, which investment will you choose? d. If you apply the profitability index criteria, which investment will you choose? e. Which project would you finally choose? Why

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