**Task:**

Senior management asks you to recommend a decision on which project(s) to accept based on the cash flow forecasts provided.

**Relevant information:**

- The firm uses a 3-year cutoff when using the payback method.
- The hurdle rate used to evaluate capital budgeting projects is 15%.

The cash flows for projects A, B and C are provided below and attached.

Project A Project B Project C

Year 0 -30,000 -20,000 -50,000

Year 1 0 4,000 20,000

Year 2 7,000 5,000 20,000

Year 3 20,000 6,000 20,000

Year 4 20,000 7,000 5,000

Year 5 10,000 8,000 5,000

Year 6 5,000 9,000 5,000

- Assume the projects are independent and answer the following:
- Calculate the payback period for each project.
- Which project(s) would you accept based on the payback criterion?
- Calculate the internal rate of return (IRR) for each project.
- Which projects would you accept based on the IRR criterion?
- Calculate the net present value (NPV) for each project.
- Which projects would you accept based on the NPV criterion?

- Assume the projects are mutually exclusive and answer the following:
- Which project(s) would you accept based on the payback criterion?
- Which projects would you accept based on the IRR criterion?
- Which projects would you accept based on the NPV criterion?

**Submission Instructions:**

**Attention:**Complete and submit the assignment by 10:00 PM ET**Friday**.- You should submit your completed work in a Word document or Excel spreadsheet if needed.

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