1) Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 357,000 –$ 46,500 1 38,000 23,300 2 58,000 21,300 3 58,000 18,800 4 433,000 13,900 Whichever project you choose, if any, you require a 14 percent return on your investment. a-1 What is the payback period for each project? (Round your answers to 2 decimal places. (e.g., 32.16)) Payback period Project A years Project B years a-2 If you apply the payback criterion, which investment will you choose? Project A Project B b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) Discounted payback period Project A years Project B years b-2 If you apply the discounted payback criterion, which investment will you choose? Project A Project B c-1 What is the NPV for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) NPV Project A $ Project B $ c-2 If you apply the NPV criterion, which investment will you choose? Project A Project B d-1 What is the IRR for each project? (Round your answers to 2 decimal places. (e.g., 32.16)) IRR Project A % Project B % d-2 If you apply the IRR criterion, which investment will you choose? Project A Project B e-1 What is the profitability index for each project? (Do not round intermediate calculations and round your final answers to 3 decimal places. (e.g., 32.161)) Profitability index Project A Project B e-2 If you apply the profitability index criterion, which investment will you choose? Project A Project B f Based on your answers in (a) through (e), which project will you finally choose? Project A Project B 2) An investment under consideration has a payback of six years and a cost of $876,000. Assume the cash flows are conventional. If the required return is 12 percent, what is the worst-case NPV?