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A firm has $400,000 to invest in either Project E or Project F with the following cash flows: Project E: Year 1: $60,000, Year 2:
A firm has $400,000 to invest in either Project E or Project F with the following cash flows:
- Project E: Year 1: $60,000, Year 2: $70,000, Year 3: $80,000, Year 4: $100,000, Year 5: $120,000
- Project F: Year 1: $20,000, Year 2: $40,000, Year 3: $90,000, Year 4: $150,000, Year 5: $200,000
The cost of capital is 8%.
Required:
- Calculate:
- Simple payback period
- Discounted payback period
- Net present value
- Internal rate of return
- Profitability index
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