Question
Company JKL has the following cash flows for two projects: Year Project E Project F 0 -$50,000 -$70,000 1 $15,000 $20,000 2 $15,000 $20,000 3
Company JKL has the following cash flows for two projects:
Year | Project E | Project F |
0 | -$50,000 | -$70,000 |
1 | $15,000 | $20,000 |
2 | $15,000 | $20,000 |
3 | $15,000 | $20,000 |
4 | $15,000 | $20,000 |
5 | $15,000 | $80,000 |
- Calculate the payback period for each project.
- Calculate the NPV for each project at a discount rate of 10%.
- Calculate the IRR for each project.
- Discuss which project is better and why, considering both payback period and NPV.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
