ABC Corporation is experiencing hard capital rationing and will not be able to invest more than 1,000,000 this year. The firm is considering four independent projects with the cash flows presented below. If the firm's annual cost of capital is %10 answer the following questions....
Period 0 ( Project A= -300,000) (Project B= -500,000) (Project C= -200,000) (Project D= -500,000)
Period 1 (Project A= 130,000) (Project B= 320,000) (Project C= 90,000) (Project D= 100,000)
Period 2 (Project A= 130,000) (Project B= 200,000) (Project C= 90,000) (Project D= 220,000)
Period 3 (Project A= 130,000) (Project B= 180,000) (Project C= 90,000) (Project D= 350,000)
a) find each projects net present value and explain what the results suggest
b) find each project's profitablity index and explain what the results suggest
c) find each projects internal rate of return and explain what the results suggest
d) given the above findings, which project should the firm accept, and why?