Two mutually exclusive projects have 3-year lives and a required rate of return of 10.5 percent. Project A costs $75,000 and has cash flows of $18,500, $42,900, and $28,600 for Years 1 to 3, respectively. Project B costs $72,000 and has cash flows of $22,000, $38,000, and $26,500 for Years 1 to 3, respectively. Using the IRR, which project, or projects, if either, should be accepted?
reject both projects
accept both projects
accept Project A and reject Project B.
accept Project B and reject Project A.
select either project as there is no significant difference between them
2-
The payback method:
is the most frequently used method of capital budgeting analysis.
is a more sophisticated method of analysis than the profitability index.
generally results in decisions that conflict with the decision suggested by NPV analysis.
considers the time value of money.
applies mainly to projects where the actual results will be known relatively soon.
3-
The pretax salvage value of an asset is equal to the:
book value if MACRS depreciation is used.
market value minus the book value.
book value minus the market value.
book value if straight-line depreciation is used.
market value.
4-
A project has an initial cost of $10,600 and produces cash inflows of $3,700, $4,900, and $2,500 for Years 1 to 3, respectively. What is the discounted payback period if the required rate of return is 7.5 percent?
2.78 years
2.65 years
never
2.94 years
2.88 years
# answer all 4 parts please
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