Question
Consider the cash flows for two proposed capital budgeting projects given below. The cost of capital is 12% for both projects. Year 0 1 2
Consider the cash flows for two proposed capital budgeting projects given below. The cost of capital is 12% for both projects.
| Year | 0 | 1 | 2 | 3 | 4 |
| Project A | -20,000 | 8,000 | 8,000 | 6,000 | 8,000 |
| Project B | -10,000 | 4,000 | 5,000 | 4,000 | 3,000 |
Project Bs NPV is calculated as $2311.07, its IRR is 23.1%, and its payback period is 2.25 years.
- Calculate the NPV for Project A.
- Calculate the IRR for Project A.
- Calculate the Payback for Project A.
- If they are independent projects, whats your acceptance/rejection decision? And why?
If they are mutually exclusive projects, whats your acceptance/rejection decision? Any why?
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The Social Profit Handbook
Authors: David Grant
1st Edition
1603586040, 978-1603586047
