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A company with an investment budget of $350,000 is evaluating Project E and Project F with the following cash flows: Year Project E Project F
A company with an investment budget of $350,000 is evaluating Project E and Project F with the following cash flows:
Year | Project E | Project F |
1 | $80,000 | $20,000 |
2 | $70,000 | $30,000 |
3 | $60,000 | $40,000 |
4 | $50,000 | $50,000 |
5 | $40,000 | $60,000 |
The discount rate is 11%.
Required: a) Calculate for each project:
- Simple payback period
- Discounted payback period
- Net present value
- Internal rate of return
- Profitability index
b) Recommend the better project based on the results.
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