Question: Problem 6 (22 marks + potential 5 bonus marks] You have been provided the follow information for a mutually exclusive capital budgeting problem: Project A

Problem 6 (22 marks + potential 5 bonus marks]
Problem 6 (22 marks + potential 5 bonus marks] You have been provided the follow information for a mutually exclusive capital budgeting problem: Project A Project B Perlod Cash Flow Perlod Cash Flow 0 - 430,000 0 - 430,000 1 230,000 1 70,000 2 179,000 2 138,000 3 124,000 3 240,000 4 94,000 4 260,000 The company has a required rate of return of 12 percent. Clearly label your work and show your calculations! a. Calculate the payback period for both projects. (4 marks) b. Calculate the discounted payback period for each of the projects. (4 marks) c. Calculate the net present value for each of the projects. (4 marks) d. Calculate the protability index for each of the projects. (4 marks) e. Calculate the IRR for project A. {You may use linear interpolation, your nancial calculator or Excel.) (4 marks) f. Complete the following table: (5 marks) Evaluation Technique Project to Accept and Why Payback Discounted Payback Protability Index g. Bonus Question: Was the same project accepted for all the evaluation techniques? If yes, which project should be accepted? If no, why and when do the different evaluation methods select different projects and which project should be accepted? (5 marks]

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