Home / Questions / Consider projects A and B with the following cash flows: C0 C1 C2 C3 A Acˆ’ $ 40 +
Consider projects A and B with the following cash flows: 
C_{0}  C_{1}  C_{2}  C_{3}  
A  Acˆ’  $  40  +  $  24  +  $  24  +  $  24  
B  Acˆ’  65  +  34  +  34  +  34  
a1. 
What is the NPV of each project if the discount rate is 10%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 
Project  NPV 
A  $ 
B  $ 
a2.  Which project has the higher NPV?  

b1. 
What is the profitability index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.) 
Project  Profitability index 
A  
B  
b2.  Which project has the higher profitability index?  

c1. 
Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? 


c2.  Which project is most attractive to a firm that is limited in the funds it can raise?  

Dec 03 2019 View more View Less
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