Question: Item 3 Item 3 5 points Consider projects A and B with the following cash flows: C 0 C 1 C 2 C 3 A

Item 3

Item 3 5 points

Consider projects A and B with the following cash flows:

	C₀			C₁			C₂			C₃
A		$	44	+	$	28	+	$	28	+	$	28
B			69	+		38	+		38	+		38

	C₀			C₁			C₂			C₃
A		$	44	+	$	28	+	$	28	+	$	28
B			69	+		38	+		38	+		38

a-1. What is the NPV of each project if the discount rate is 12%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

a-2. Which project has the higher NPV?

b-1. What is the profitability index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-2. Which project has the higher profitability index?

c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects?

d. Which project is most attractive to a firm that is limited in the funds it can raise?

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