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 cash
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 cash inflows associated with these projects are shown in the following table:
CASH FLOWS | PROJECT A | PROJECT B | PROJECT C |
INITIAL INVESTMENT (CF) | $90,000 | $130,000 | $120,000 |
CASH INFLOWS (CF), t=1 to 5 | $30,000 | $41,000 | $41,500 |
Calculate the payback period for each project.
payback period = initial investment / after-tax cash flow
initial investment of project A is:
round to the nearest dollar
after-tax cash flow of project A is:
round to the nearest dollar
payback period of project A is:
round to two decimal places
initial investment of project B is:
round to the nearest dollar
after-tax cash flow of project B is:
round to the nearest dollar
payback period of project B is:
round to two decimal places
initial investment of project C is:
round to the nearest dollar
after-tax cash flow of project C is:
round to the nearest dollar
payback period of project C is:
round to two decimal places
Calculate the net present value? (NPV) of each? project, assuming that the firm has a cost of capital equal to 15%.
NPV of project A: $
round to the nearest cent
NPV of project B: $
round to the nearest cent
NPV of project C: $
round to the nearest cent
Calculate the internal rate of return? (IRR) for each project.
IRR of project A: %
round to two decimals
IRR of project B: %
round to two decimals
IRR of project C: %
round to two decimals
Indicate which project you would recommend.
Step by Step Solution
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Step: 1
To calculate the payback period net present value NPV and internal rate of return IRR for each project we will use the provided data and formulas Lets ...Get Instant Access to Expert-Tailored Solutions
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Step: 3
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