Question 1: (15 marks) Consider the following two independent projects: Cash Flow Cash Flow Year (A)...

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Question 1: (15 marks) Consider the following two independent projects: Cash Flow Cash Flow Year (A) (B) 0 -$58,000 -$280,000 1 $26,000 $48,000 2 $20,000 $50,000 3 $18,200 $66,000 4 $16,000 $360,000 Whichever project you choose, if any, you require a return of 10 percent on your investment. a) If you apply the payback criterion and the required payback period is 3 years, which investment will you choose? Why? (3 marks) b) If you apply the discounted payback criterion and the required discounted payback period is 3 years, which investment will you choose? Why? (3 marks) c) If you apply the profitability index criterion, which investment will you choose? Why? (3 marks) d) If you apply the NPV criterion, which investment will you choose? Why? (3 marks) e) Based on your answer in parts (a) through (d), which project will you finally choose? Why? (3 marks) Question 1: (15 marks) Consider the following two independent projects: Cash Flow Cash Flow Year (A) (B) 0 -$58,000 -$280,000 1 $26,000 $48,000 2 $20,000 $50,000 3 $18,200 $66,000 4 $16,000 $360,000 Whichever project you choose, if any, you require a return of 10 percent on your investment. a) If you apply the payback criterion and the required payback period is 3 years, which investment will you choose? Why? (3 marks) b) If you apply the discounted payback criterion and the required discounted payback period is 3 years, which investment will you choose? Why? (3 marks) c) If you apply the profitability index criterion, which investment will you choose? Why? (3 marks) d) If you apply the NPV criterion, which investment will you choose? Why? (3 marks) e) Based on your answer in parts (a) through (d), which project will you finally choose? Why? (3 marks)