Problem:
Year Cash Flow(A) Cash Flow(B)
0 -325,000 -30,000
1 43,000 15,800
2 51,000 13,100
3 69,000 12,700
4 480,000 9,700
15% return on the investment is required.
a) if you apply payback criterion, which investment will you choose and why.
b) if you apply NPV criterion, which investment will you choose and why.
c) if you apply IRR criterion, which investment will you choose and why.
d) if you apply profitability index criterion, which investment will you choose and why.
e) which project is finally chosen and why.