Critically think and outline the difficulties that might come up in actual applications of the various criteria used in capital budgeting decisions (payback, AAR, discounted payback, NPV, IRR and profitability index)? Which one would be the easiest to implement in actual applications? The most difficult?

QA) choose the correct answer: 1. IBM networks want to modernize their networking system. Proposals have been received from two major software companies.  The first proposal cost $6million but will raise the firm’s annual cash flows by $3million. The second proposal cost $7million and provides cash flow of $3.5million a year. Both projects have a life span of 3 years. Assuming that the cost of capital is 8%, which proposal may be recommended on the basis of Net Present Value criteria. Select one: a. Project B, NPV 1731290 b. Project A, NPV 20198 c. Project B, NPV 2019839 d. Project A, NPV 2019839   2. Mohammed is 65 years of age and has a life expectancy of 12 more years. He wishes to invest $40,000 in an annuity that will make a level payment at the end of each year until his death. If the interest rate is 10%, what income can Mr. Mohammed expect to receive each year? (Choose the correct answer from below options and attach all your explanations in the other link provided) Select…

Answered with short words. Please be specific: What are the limitations/problems from classifying performance using raw returns? and, What are the limitations of using Sharpe Ratio to classify fund performance?

Explain why the NPV is a more accurate measure than IRR when evaluating the financial profitability of a project.