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Category > Business & Finance Posted 15 Jul 2017 My Price 12.00

The treasurer of Davids, Inc., has projected the cash flows of projects

The treasurer of Davids, Inc., has projected the cash flows of projects A, B, and C as follows. Suppose the relevant discount rate is 12 percent a year.

Year

Project A

Project B

Project C

0

-$100,000

-$200,000

-$100,000

1

70,000

130,000

75,000

2

70,000

130,000

60,000

a. Compute the profitability indices for each of the three projects.

b. Compute the NPVs for each of the three projects.

c. Suppose these three projects are independent. Which projects should Davids accept based on the profitability index rule?

d. Suppose these three projects are mutually exclusive. Which project should Davids accept based on the profitability index rule?

e. Suppose Davids’ budget for these projects is $300,000. The projects are not divisible.Which projects should Davids accept?

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Status NEW Posted 15 Jul 2017 10:07 AM My Price 12.00

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