Use the following cash flows for project A and B:
A: (-2000, 500, 600, 700, 800) B: (-2000, 950, 850, 400, 300)
a. Calculate the payback period for project A and B.
b. If the discount rate is 12%, what is the discounted payback period for project A? For project B?
c. Calculate the internal rate of return for project A and B.
d. If A and B are mutually exclusive projects and the required rate of return is 5%, which should be accepted?
f. If the discount rate is 12% and A and B are mutually exclusive, which project should be accepted?
j. At what discount rate will we be indifferent between A and B?