Capital Budgeting Methods

Project $S$ has a cost of $$10,000$ and is expected to produce benefits $($cash flows$)$ of

$$3,500$ per year for $5$ years. Project L costs $$25,000$ and is expected to produce

cash flows of $$8,000$ per year for $5$ years.

Calculate the two projects' NPVs$,$ assuming a cost of capital of $14\%.$ Do not round

intermediate calculations. Round your answers to the nearest cent.

Project S: $

Project L: $

Which project would be selected, assuming they are mutually exclusive?

Based on the NPV values,

would be selected.

Calculate the two projects' IRRs. Do not round intermediate calculations. Round your

answers to two decimal places.

Project S:

$\%$

Project L:

$\%$

Which project would be selected, assuming they are mutually exclusive?

Based on the IRR values,

would be selected.

Calculate the two projects' MIRRs, assuming a cost of capital of $14\%.$ Do not round

intermediate calculations. Round your answers to two decimal places.

Project S:

$\%$

Project L:

$\%$

Which project would be selected, assuming they are mutually exclusive?

Based on the MIRR values,

would be selected.

Calculate the two projects' PIs, assuming a cost of capital of $14\%.$ Do not round

intermediate calculations. Round your answers to three decimal places.

Project S:

Project L:

Which project would be selected, assuming they are mutually exclusive?

Based on the PI values,

would be selected.

Which project should actually be selected?

should actually be selected.