Project A Project B Project C Project D Project E Project F

The table below contains information on six potential projects that you could invest in. There are no cash flows after year 4. Assuming that you can only pick one, which one should you choose? Select the best answer. FCF Forecasts by Year (in $1,000) Interest Rate Project Project A Project B Project C Project D Project E Project F o (350) (420) (480) (500) (375) (300) 1 80 500 (20) 150 (25) 300 2 120 90 270 165 150 200 3 150 10 300 180 175 o 4 300 350 510 200 o (EAR) 12% 12% 12% IRR 23.8% 36.1% 22.7% 27.4% 9.5% 45.7% Payback Period 3 Years 1 Year 3 Years 5 Years 5 Years 1 Year O O O O O O P roject A Project a Project C Project D Project E Project F