Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B)
0 –$ 345,000 –$ 48,500
1 50,000 24,500
2 70,000 22,500
3 70,000 20,000
4 445,000 15,100

Whichever project you choose, if any, you require a return of 11 percent on your investment.

1. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)
2. If you apply the payback criterion, which investment will you choose?
a. Project A
b. Project B
3. What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)
4. If you apply the discounted payback criterion, which investment will you choose?
a. Project A
b. Project B
5. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)
6. If you apply the NPV criterion, which investment will you choose?
a. Project A
b. Project B
7. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. g., 32.16.)
8. If you apply the IRR criterion, which investment will you choose?
a. Project A
b. Project B
9. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e. g., 32.161.)
10. If you apply the profitability index criterion, which investment will you choose?
a. Project A
b. Project B
11. Based on your answers in (a) through (e), which project will you finally choose?
a. Project A
b. Project B