Question
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 8 percent. Year
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 8 percent.
Year | Dry Prepreg | Solvent Prepreg | ||||
0 | $ | 1,840,000 | $ | 820,000 | ||
1 | 1,114,000 | 445,000 | ||||
2 | 928,000 | 740,000 | ||||
3 | 764,000 | 418,000 |
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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