Question
Consider the following cash flows of two mutually exclusive projects for Illinois Renewable Energy Company. Assume the discount rate for the company is 12
Consider the following cash flows of two mutually exclusive projects for Illinois Renewable Energy Company. Assume the discount rate for the company is 12 percent. Keep two decimal places when calculating. Year Project A 0 -$2,000,000 1 2 3 4 $500,000 $750,000 $750,000 $750,000 Project B -$750,000 $500,000 $250,000 $200,000 0 a. Calculate the payback period of each project, which project should be picked based on payback period? (2 pts) b. Calculate the Net Present Value of each project, which project should be taken based on NPV? (1 pt) c. Calculate the IRR of each project, which project should be taken based on IRR? (2 pts) d. If you can only invest in one of the projects, which is the best one to invest in?
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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