Consider two projects: A) with casháows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$ 4(a) Assume an opportunity cost of capital of 11%. Which of these projects would you accept, if you use the NPV method? 4(b) Which one would you prefer, among the two, based on their ProÖtability Index (PI)? 4(c) Which one would you choose if the cost of capital is 16%? 5(a) What is the payback period of each project? 5(b) Is the project with the shortest payback period also the one with the highest NPV? Explain. 6(a) What are the internal rates of return on the two projects? 6(b) Does the IRR rule in this case give the same advice i.e. preferred outcome as NPV?
Consider two projects: A) with casháows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$
4(a) Assume an
4(b) Which one would you prefer, among the two, based on their ProÖtability Index (PI)?
4(c) Which one would you choose if the cost of capital is 16%?
5(a) What is the payback period of each project?
5(b) Is the project with the shortest payback period also the one with the highest NPV? Explain.
6(a) What are the
6(b) Does the IRR rule in this case give the same advice i.e. preferred outcome as NPV?
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