Consider the following two mutually exclusive projects:

Year	Cash Flow (A)				Cash Flow (B)
0	$	340,000			$	51,500
1		55,000				25,000
2		75,000				23,000
3		75,000				20,500
4		450,000				15,600

Whichever project you choose, if any, you require a 16 percent return on your investment.

a-1	What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Payback period
Project A	years
Project B	years

a-2

If you apply the payback criterion, which investment will you choose?

	Project A
	Project B

b-1	What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Discounted payback period
Project A	years
Project B	years

b-2

If you apply the discounted payback criterion, which investment will you choose?

	Project A
	Project B

c-1	What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Project A	$
Project B	$

c-2

If you apply the NPV criterion, which investment will you choose?

	Project A
	Project B

d-1	What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

	IRR
Project A	%
Project B	%

d-2

If you apply the IRR criterion, which investment will you choose?

	Project A
	Project B

e-1	What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

	Profitability index
Project A
Project B

e-2

If you apply the profitability index criterion, which investment will you choose?

Project B

Project A

A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows:

Year	Cash Flow
0	$	27,300
1		11,300
2		14,300
3		10,300

What is the NPV for the project if the required return is 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

$

At a required return of 10 percent, should the firm accept this project?

	Yes
	No

What is the NPV for the project if the required return is 26 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

$

At a required return of 26 percent, should the firm accept this project?

	Yes
	No