Question
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for Tokyo Rubber Company is 9 percent.
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for Tokyo Rubber Company is 9 percent. |
Year | Dry Prepreg | Solvent Prepreg | ||||
0 | $ | 1,770,000 | $ | 785,000 | ||
1 | 1,107,000 | 410,000 | ||||
2 | 914,000 | 670,000 | ||||
3 | 757,000 | 404,000 | ||||
a. | What is the payback period for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
Payback period | ||
Dry Prepeg | years | |
Solvent Prepeg | years | |
b. | What is the NPV for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
NPV | ||
Dry Prepeg | $ | |
Solvent Prepeg | $ | |
c. | What is the IRR for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
IRR | ||
Dry Prepeg | % | |
Solvent Prepeg | % | |
d. | Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Incremental IRR | % |
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