Consider projects A and B with the following cash flows: ...
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Finance
Consider projects A and B with the following cash flows:
| C0 | C1 | C2 | C3 | |
| A | -$44 | +$28 | +$28 | +$28 |
| B | -69 | +38 | +38 | +38 |
a) What is the NPV of each project if the discount rate is 12%?
b) Which project has the higher NPV?
c) Which project has the higher profitability index?
d) Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects?
e) Which project is most attractive to a firm that is limited in the funds it can raise?
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