Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 -$195,070 -$32,040
1 25,800 13,379
2 60,000 11,897
3 50,000 10,634
Whichever project you choose, if any, you require a 15 percent return on your investment.
Required:
(a) What is the payback period for Projects A and B? (Round your answers to 2 decimal places. (e.g., 32.16))
(b) What is the discounted payback period for Projects A and B? (Round your answers to 2 decimal places. (e.g., 32.16))
(c) What is the NPV for Projects A and B? (Do not include the dollar sign ($). Round your answers to 2 decimal places, (e.g., 32.16))
(d) What is the IRR for Projects A and B? (Do not include the percent sign (%). Round your answers to 2 decimal places. (e.g., 32.16))
(e) What is the profitability index for Projects A and B? (Round your answers to 3 decimal places. (e.g., 32.161))
(f) Based on your answers in (a) through (e), you will finally choose which project?