Question
Bernies Restaurants is considering two mutually exclusive projects having the cash flow streams shown in the table below. Compute the net present value (NPV) for
- Bernies Restaurants is considering two mutually exclusive projects having the cash flow streams shown in the table below.
- Compute the net present value (NPV) for both projects using a 15% required rate of return.
- Compute the internal rate of return (IRR) for both projects.
- Compute the profitability index for both projects.
- Which project should Bernies business accept and why?
| Bernies Restaurants Capital Budgeting Projects |
| ||
| Year | Project A Net Cash Flow | Project B Net Cash Flow | |
| 0 | -$ 90,000 | -$100,000 | |
| 1 | $ 40,000 | $ 30,000 | |
| 2 | $ 40,000 | $ 50,000 | |
| 3 | $ 40,000 | $ 25,000 | |
| 4 | $ 40,000 | $ 55,000 | |
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An Evaluation Of The Benefits And Value Of Libraries
Authors: Nyström, Viveca , Sjögren, Linnéa
1st Edition
1843346869,1780632932
