Question
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 12 percent. Year
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 12 percent.
Year | Dry Prepreg | Solvent Prepreg | ||||
0 | $ | 1,750,000 | $ | 775,000 | ||
1 | 1,105,000 | 400,000 | ||||
2 | 910,000 | 650,000 | ||||
3 | 755,000 | 400,000 | ||||
a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Payback period | ||
Dry Prepreg | years | |
Solvent Prepreg | years | |
b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
NPV | ||
Dry Prepreg | $ | |
Solvent Prepreg | $ | |
c. What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
IRR | ||
Dry Prepreg | % | |
Solvent Prepreg | % | |
d. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Incremental IRR %
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