Assume projects A and B are mutually exclusive. The respective cash flows for projects A and B are stated below: Project Year 0 Year 1 Year 2 Year 3 A $575,000 $373,000 $219,000 $185,000 $980,000...


Assume projects A and B are mutually exclusive. The respective cash flows for projects A and<br>B are stated below:<br>Project<br>Year 0<br>Year 1<br>Year 2<br>Year 3<br>A<br>$575,000<br>$373,000<br>$219,000<br>$185,000<br>$980,000<br>$395,000<br>$477,000<br>$339,000<br>If the discount rate, based on an investment of similar risk, is 10%, which of the projects<br>should be accepted based on:<br>(a) Payback period rule<br>(b) NPV rule<br>(c) IRR rule<br>(d) Profitability Index criteria<br>(10)<br>(25)<br>(15)<br>(25)<br>Note: Show your answers in tables and all calculations properly presented.<br>

Extracted text: Assume projects A and B are mutually exclusive. The respective cash flows for projects A and B are stated below: Project Year 0 Year 1 Year 2 Year 3 A $575,000 $373,000 $219,000 $185,000 $980,000 $395,000 $477,000 $339,000 If the discount rate, based on an investment of similar risk, is 10%, which of the projects should be accepted based on: (a) Payback period rule (b) NPV rule (c) IRR rule (d) Profitability Index criteria (10) (25) (15) (25) Note: Show your answers in tables and all calculations properly presented.

Jun 04, 2022
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