Question
Consider the following cash flows of two mutually exclusive projects available for a local business that you are advising. Assume the discount rate for the
Consider the following cash flows of two mutually exclusive projects available for a local business that you are advising. Assume the discount rate for the company is 15 percent. Keep two decimal places when calculating.
| Year | Project A | Project B |
| 0 | -$200,000 | -$800,000 |
| 1 | $20,000 | $400,000 |
| 2 | $60,000 | $400,000 |
| 3 | $120,000 | $200,000 |
| 4 | $160,000 | $100,000 |
- For each project, Calculate the payback period, the Net Present Value, and the IRR and indicate which project would be selected using that criteria.
- If you can only invest in one of the projects, which is the best one to invest in? Briefly explain your reasoning.
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The Complete Personal Finance Handbook
Authors: Teri B Clark
1st Edition
160138047X, 978-1601380470
