Reference no: EM133037862

Question - You are evaluating two potential projects that have the following cash flows:

Time	Project A	Project B
0	$25,000	$50,000
1	$6,000	$16,500
2	$6,000	$15,000
3	$7,000	$13,000
4	$8,000	$11,000
5	$9,000	$9,000

1. For each project determine:

a. Payback Period

b. Discounted payback period assuming a required return of 9%

c. NPV

d. IRR

e. Profitability index

2. If the two projects are mutually exclusive and you require a return of 9%, which project would you select? Why?

3. At what rate are you indifferent between the two projects? (What is the crossover rate?)

4. Create a single chart showing NPV profiles of both projects for required return rates up to 20%.