Analyze the results of the net present value calculations and the significance of these results, supported with examples.

Determine which project should be adopted based on the net present value approach and provide rationale for your decision.

Analyze the results of the internal rate of return calculation and the significance of these results, supported with examples.

Determine which project should be adopted based on the internal rate of return approach and provide rationale for your decision.

Determine the preferred method in the given circumstances and provide reasoning and details to support the method selected

Synthesize results of analyses and computations to determine the best investment opportunity to recommend to the president of Donovan Enterprises.

Net present value computation Project A Project B Year Cashflows DCF @ 8% PV DCF @ 13% PV Year Cashflows DCF @ 8% PV DCF @ 13% PV a b c=axb d e=axd a b c=axb d e=axd (400,000) 1.0000 $ (400,000.00) 1.0000 $ (400,000.00) O O (160,000) 1.0000 $ (160,000.00) 1.0000 $ (160,000.00) 126,000 0.9259 $ 116,666.67 0.8850 $ 111,504.42 52,800 0.9259 $ 48,888.89 0.8850 $ 46,725.66 126,000 0.8573 $ 108,024.69 0.7831 $ 98,676.48 W N H W N H 52,800 0.8573 $ 45,267.49 0.7831 $ 41,350.14 126,000 0.7938 $ 100,022.86 0.6931 $ 87,324.32 52,800 0.7938 $ 41,914.34 0.6931 $ 36,593.05 126,000 0.7350 $ 92,613.76 0.6133 $ 77,278.16 4 52,800 0.7350 $ 38,809.58 0.6133 $ 32,383.23 Net present value S 17,327.98 $ (25,216.61) Net present value 14,880.30 $ (2,947.91) Comment - Based on the NPV computations project A is recommended as it gives a higher NPV of $ 17,327.98 compared to $14,880.30 from porject B. IRR (N1 x r2) - (N2 x r1) x 100 IRR = (N1 xr2) - (N2 x r1) x 100 N1 - N2 N1 - N2 ($17,327.98 x 0.13) - (-$25,216.61 x 0.08) x 100 S ($14,880.30 x 0.13) - ($-2,947.91 x 0.08) x 100 $ 17,327.98 - ($25,216.61) $14,880.30 - ($2,947.91) Project A = 10.036449% Project B = 12.173245%