Question

Consider the following two mutually exclusive projects:

Year	Cash Flow (A)	Cash Flow (B)
0	–$429,000	–$42,000
1	42,000	20,800
2	64,000	12,900
3	81,000	20,600
4	544,000	17,400

The required return on these investments is 11 percent.

Required:
(a)	What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Payback period
Project A	years
Project B	years

(b)	What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Net present value
Project A	$
Project B	$

(c)	What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

	Internal rate of return
Project A	%
Project B	%

(d)	What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).)

	Profitability index
Project A
Project B

(e)	Based on your answers in (a) through (d), which project will you finally choose? Assume no capital constraints, so all positive NPV investments can be funded at the discount rate.
	(Click to select)Project B? Project A?

Answer 1