Question
Calculate the payback period, ARR, IRR and NPV (at 12%) for two proposed four-year projects, B1 and B2, the cash flows (EBDIT) for which are
- Calculate the payback period, ARR, IRR and NPV (at 12%) for two proposed four-year projects, B1 and B2, the cash flows (EBDIT) for which are as follows:
| Year | 0 | 1 | 2 | 3 | 4 |
| B1 | -60,000 | 9,000 | 10,000 | 25,000 | 30,000 |
| B2 | -60,000 | 30,000 | 25,000 | 10,000 | 9,000 |
(Assume that straight-line depreciation is applicable and that there is no income tax.)
Why are the NPV and IRR of project B2 superior to B1?
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Fundamentals Of Corporate Finance
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
6th Edition
0072553073, 9780072553079
