Question
A corporation is considering two mutually exclusive projects. Both projects require the same investment, but have different patterns of cash-inflow. The cash-flows are shown below
A corporation is considering two mutually exclusive projects. Both projects require the same investment, but have different patterns of cash-inflow. The cash-flows are shown below for years 1 to 7. All cash-flows are in thousands of dollars. The corporation applies a 10% discount rate.
-
Rank the projects by Payback Period, Discounted Payback Period, NPV, Profitability Index and IRR. Project cash-flows are in thousands of dollars.
-
At what discount rate will Project 1 and Project 2 have the same NPV?
| Project Number | 1 | 2 |
|
|
| |
| Initial Investment | -2,000 | -2,000 |
| Time |
| |
| 1 | 1200 | -350 |
| 2 | 900 | -60 |
| 3 | 300 | 60 |
| 4 | 90 | 350 |
| 5 | 70 | 700 |
| 6 |
| 1200 |
| 7 |
| 2250 |
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Handbook Of Energy Finance Theories Practices And Simulations
Authors: Stéphane Goutte, Duc Khuong Nguyen
1st Edition
9813278374, 978-9813278370
