Question: Consider the following two projects: Cash flows Project A Project B C 0 $ 150 $ 150 C 1 60 75 C 2 60 75

Consider the following two projects:

Cash flows Project A Project B
C0 $ 150 $ 150
C1 60 75
C2 60 75
C3 60 75
C4 60

  1. Does the IRR rule in this case give the same answer as NPV?
  2. If the opportunity cost of capital is 10%, what is the profitability index for each project?
  3. Is the project with the highest profitability index also the one with the highest NPV?

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