Question: You have also been asked for your views on three unrelated sets of projects. Each set of projects involves two mutually exclusive projects. These projects

You have also been asked for your views on three unrelated sets of projects. Each set of projects involves two mutually exclusive projects.
These projects follow.
Caledonia is considering two investments with 1-year lives. The more expensive of the two will produce more savings. Assume these
projects are mutually exclusive and that the required rate of return is 10 percent. Given the following free cash flows:
Calculate the NPV for each project.
Calculate the PI for each project.
Calculate the IRR for each project.
If there is no capital-rationing constraint, which project should be selected? If there is a capital-rationing constraint, how
should the decision be made?
You have also been asked for your views on three unrelated

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