What is the discounted profitability index for project


Task: 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

Q1. 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?

Q2. 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?

Q3. 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?

Q4. What is the Internal Rate of Return for Project A?

Q5. What is the Payback for Project B?

Q6. What is the Discounted Payback for Project A?

Q7. What is the Profitability Index for Project A?

Q8. What is the Discounted Profitability Index for Project B?

Q9. What is the Cross-Over Rate Between the two Projects?

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Finance Basics: What is the discounted profitability index for project
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