Question: Consider the following two projects: Cash flows Project A Project B Co -$200 -$200 C1 80 100 C2 80 100 C3 80 100 C4 80

 Consider the following two projects: Cash flows Project A Project BCo -$200 -$200 C1 80 100 C2 80 100 C3 80 100

Consider the following two projects: Cash flows Project A Project B Co -$200 -$200 C1 80 100 C2 80 100 C3 80 100 C4 80 e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 11%, what is the profitability index for each project? Is the project with the highest profitability index also the one with the highest NPV? Which measure should you use to choose between the projects

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