Question
Analyze the cash flows for Project E and Project F with a WACC of 12%. Cash Flow Project E Project F Year 0 -$40,000 -$90,000
Analyze the cash flows for Project E and Project F with a WACC of 12%.
Cash Flow | Project E | Project F |
Year 0 | -$40,000 | -$90,000 |
Year 1 | $18,000 | $30,000 |
Year 2 | $22,000 | $35,000 |
Year 3 | $18,000 | $28,000 |
Year 4 | $15,000 | $20,000 |
Year 5 | $15,000 |
- Compute the NPV for each project.
- Find the IRR for both projects.
- Calculate the equivalent annual annuity (EAA).
- Compare the projects and decide based on NPV and IRR.
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
