Question: Project C0 C1 C2 C3 C4 C5 A -1500 800 800 0 0 0 B -2500 1200 1200 1200 1200 0 C -4000 1500 1500

Project

C0

C1

C2

C3

C4

C5

A

-1500

800

800

0

0

0

B

-2500

1200

1200

1200

1200

0

C

-4000

1500

1500

1500

1500

1500

a) Calculate the NPV of each project if the opportunity cost of capital is 10%.

b) Based on the NPV, which project(s) should the firm accept? Justify your answer.

c) Calculate the payback period for each project.

d) Which project(s) would a firm accept using the payback rule with a cutoff period of 4 years?

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