Question
A company is evaluating the investment of $180,000 in either Project I or Project J with the following cash flows: Year Project I Project J
A company is evaluating the investment of $180,000 in either Project I or Project J with the following cash flows:
Year | Project I | Project J |
1 | $60,000 | $15,000 |
2 | $60,000 | $35,000 |
3 | $60,000 | $55,000 |
4 | $60,000 | $120,000 |
5 | $60,000 | $45,000 |
The discount rate is 9%.
Required:- Compute for each project:
- Simple payback period
- Discounted payback period
- Net present value
- Internal rate of return
- Profitability index
- Which project should the company choose based on your analysis?
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
