Question
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 9 percent. Year
Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for both projects is 9 percent.
Year | Dry Prepreg | Solvent Prepreg | ||||
0 | –$ | 1,850,000 | –$ | 825,000 | ||
1 | 1,115,000 | 450,000 | ||||
2 | 930,000 | 750,000 | ||||
3 | 765,000 | 420,000 | ||||
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 %
Step by Step Solution
3.32 Rating (152 Votes )
There are 3 Steps involved in it
Step: 1
Here are the calculations a Dry Prepreg payback peri...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started