ABC Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows: Expected Cash Flows Year Project(A) Project(B) 0 -375 -575 1 -300 190 2...

ABC Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows:

Expected Cash Flows

Year           Project(A)     Project(B)

0                 -375             -575

1                 -300               190

2                  -200             190

3                -100               190

4                600                190

5                600                190

6              926                   190

7               -200                 0
If you were told that each project’s cost of capital was 12%, which project should be selected using the NPV criteria? What is each project’s IRR? What is the regular payback period for these two projects? What is the profitability index for each project if the cost of capital is 12%?