You are asked to evaluate the following two projects for Adventures Club, Inc.:

PROJECT D $($Trips to Disneyland$)$

PROJECT F $($International Film Festivals$)$

The firm's marginal cost of capital is $12$ percent.

A$.$ For each project, calculate the net present value $($NPV$)$ and internal rate of return $($IRR$).$

If Projects D and F are independent projects, would you recommend accepting D$,$F$,$ or both?

B$.$ If Projects D and F are mutually exclusive, which project would be preferable according to their NPVS and IRRs? Explain the reason for any difficulty encountered in ranking the two projects.

C$.$ Sketch NPV profiles for projects D and F$.$ Place both projects on the same graph. Plot points at discounts rates of $5\%,10\%,15\%,$ and $20\%,$ as well as the X and Y intercepts for each project. Calculate and plot the crossover point. In the absence of capital rationing,

which project should be chosen?

D$.$ If the firm is experiencing severe capital rationing, which project would be preferable? Which criterion $($NPV or IRR$)$ are you using in this case and why?

E$.$ Calculate the profitability index $($PI$)$ for projects D and F $.$ How will the size of the budget affect the selection of the project? When would you use PI instead of NPV$?$ If you use PI to select the preferable project, what will be the opportunity cost to the stockholders?