Question
All techniques Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax
All techniques Decision among mutually exclusive investmentsPound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table.
Cash flows | Project A | Project B | Project C | ||||
Initial investment (CF) | $60,000 | $90,000 | $100,000 | ||||
Cash inflows (CF), t=1 to 5 | $20,000 | $31,500 | $33,000 |
a.Calculate the payback period for each project.
b.Calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 8%.
c.Calculate the internal rate of return (IRR) for each project.
d.Indicate which project you would recommend.
(round to two decimals)
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