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CA Company has $250,000 available to invest. The entity is faced with a choice between two different investment options in different areas of the business.
CA Company has $250,000 available to invest. The entity is faced with a choice between two different investment options in different areas of the business. You are presented with the following cash flows for the two investment choices.
Project A $ | Project B $ | |
Year 0 | -250,000 | -245,000 |
Year 1 | 40,000 | 20,000 |
Year 2 | 120,000 | 140,000 |
Year 3 | 200,000 | 210,000 |
Year 4 | 200,000 | 210,000 |
CA Company uses a discount rate (required rate of return) of 14%. For each of the projects, calculate the following. (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
Project A | Project B | |
net present value (NPV) | $ | $ |
profitability index | ||
internal rate of return (IRR) | % | % |
payback period | years | years |
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