Question: Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and
Lithium, Inc. is considering two mutually exclusive projects, A and B. Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two. Project B costs $120,000 and is expected to generate $64,000 in year one, $67,000 in year two, $56,000 in year three, and $45,000 in year four. Lithium, Inc.'s required rate of return for these projects is 10%. The profitability index for Project A is Select one: a. 1.27 b. 1.22 c. 1.12 d. 1.17.One of the advantages of the NPV is that it is consistent with the firm`s goal of shareholder wealth maximization. Select one: True False.The number of years it takes to recapture a project`s initial outlay from the discounted free cash flows is called as the pay back period Select one: True False.
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