Matterhorn Corporation tries to choose between the following two mutually exclusive design projects: 

Year	Cash Flow (I)	Cash Flow (II)
0	-$89,000	-$57,000
1	$38,900	$11,100
2	$49,000	$36,500
3	$29,000	$30,500

Requirement 1: (a) If the return is 12 percent, what is the rate of return for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (eg, 32,161).) Profitability Ratio Project I Project II (b) If the required return is 12 percent and the firm applies the decision rule From the profitability ratio, which project should the firm accept?

Requirement 2: (a) If the required return is 12 percent, what is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (eg, 32.16).

Answer rating: 100% (QA)

Requirement 1 a To calculate the rate of return for each project we need to use the formula for the ... View the full answer