Question: Two mutually exclusive projects are being considered which have the following projected cash flows: Year Project A Project B 0 ($50,000) ($50,000) 1 $15,625 $

Two mutually exclusive projects are being considered which have the following projected cash flows:

Year Project A Project B

0 ($50,000) ($50,000)

1 $15,625 $ 0

2 $16,000 $ 0

3 $15,000 $ 0

4 $16,000 $ 0

5 $15,500 $99,500

a. Calculate the NPV for each of these projects using a 10% rate of return. Also, indicate which project should be chosen based on the NPV calculation. b.Calculate the payback periods for each of the above projects. Also, indicate whether either of the projects would be chosen by a company which requires a payback period of 4 years. c.Briefly explain in your own words why the two analyses yield differing results. d.Calculate the profitability index for each of the above potential projects.

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