Assignment:
Cash Flows
Years Project A Project B
0 $ (500,000.00) $ (500,000.00)
1 $ 80,000.00 $ 280,000.00
2 $ 130,000.00 $ 230,000.00
3 $ 180,000.00 $ 180,000.00
4 $ 270,000.00 $ 130,000.00
5 $ 300,000.00 $ 80,000.00
Question 1: If the weighted average cost of capital for the firm is 4% and the projects are mutually exclusive, which project would you choose based upon the NPV rule?
Question 2: If the weighted average cost of capital for the firm is 4% and the projects are independent, which project would you choose based upon the NPV rule?
Question 3: If the weighted average cost of capital for the firm is 18% and the projects are mutually exclusive, which project would you choose based upon the NPV rule?
Question 4: What is the Internal Rate of Return for Project A?
Question 5: What is the Payback for Project B?
Question 6: What is the Discounted Payback for Project A?
Question 7: What is the Profitability Index for Project A?
Question 8: What is the Discounted Profitability Index for Project B?
Question 9: What is the Cross-Over Rate Between the two Projects?