2. A company has to choose one of the following two mutually exclusive projects. Both the projects...
Question:
2. A company has to choose one of the following two mutually exclusive projects. Both the projects will be depreciated on a straight-line basis. The firm's cost of capital is 10 per cent and the tax rate is 35 per cent. The before-tax cash flows are: Project 1 2 X Y -20,000 4,200 4,800 7,000 8,000 2,000 -15,000 4,200 4,500 4,000 5,000 1,000 Which project should the firm accept if the following criteria are used:
(a) payback period,
(b) internal rate of return,
(c) net present value, and
(d) profitability index.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: