Question: Solar Tech Inc. must choose between two mutually exclusive projects: A and B . Both have a 1 0 % required rate of return. Consider
Solar Tech Inc. must choose between two mutually exclusive projects: A and B Both have a required rate of return. Consider the following on projected cash flows: a If you apply the payback criterion, which investment will you choose? Why? marks b If you apply the NPV criterion, which investment will you choose? Why? marks c If you apply the profitability index criterion, which investment will you choose? Why? marks d What is the internal rate of return for each project? marks e At what required rate of return would management be indifferent as to which project to choose? marks f Based on your answers to the questions above, which project will you finally choose? Why? marks
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