Question: Please answer questions 3 & 4 below based on the following: Given the following information on the expected cashflows from Project A and Project B,

Please answer questions 3 & 4 below based on the following:

Given the following information on the expected cashflows from Project A and Project B, build a spreadsheet to answer the questions below.

Year

Project A CF

Project B CF

0

(100)

(100)

1

10

70

2

60

50

3

80

20

  1. Calculate NPV, IRR, Payback Period, and the Profitability Index for each project. Assume a WACC of 8%.
  2. Calculate the cross-over rate. What does this tell you?
  3. Under each criteria in part a, which project would you choose? (a table would be helpful)
  4. Which method provides the best results? Explain.

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