Question
Consider the following cash flows for Project A and Project B: Year Project A Project B 0 -$50,000 -$60,000 1 $12,000 $15,000 2 $15,000 $18,000
Year | Project A | Project B |
0 | -$50,000 | -$60,000 |
1 | $12,000 | $15,000 |
2 | $15,000 | $18,000 |
3 | $18,000 | $21,000 |
4 | $21,000 | $24,000 |
5 | $24,000 | $27,000 |
a. Calculate the NPV for each project with a discount rate of 12%. b. Determine the IRR for both projects. c. Calculate the traditional payback period for each project. d. Compute the discounted payback period for each project. e. If both projects are independent, which project(s) would you recommend and why?
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Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
25th edition
978-1285069609, 1285069609, 978-1133607601
