Consider the following cash flows of two mutually exclusive projects for A Z Motorcars Assume the discount rate for both projects is 10 percent a Based on the payback period, which project should be taken b Based on the NPV, which project should be taken c Based on the IRR, which project should be ...

a The payback period is the time that it takes for the cumulative undiscounted cash inflows to equal the initial investment AZM MiniSUV Cumulative cas ...

Consider the following cash flows of two mutually exclusive projects for A-Z Motorcars. Assume the discount rate

Question:

Consider the following cash flows of two mutually exclusive projects for A-Z Motorcars. Assume the for both projects is 10 percent.

YEAR AZM MINI-SUV AZF FULL-SUV -$650,000 370,000 -$975,000 490,000 460,000 410,000 310,000 3 260,000

a. Based on the payback period, which project should be taken?
b. Based on the NPV, which project should be taken?
c. Based on the IRR, which project should be taken?
d. Based on the above analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...