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Consider the following two mutually exclusive projects. Whichever project you choose, if any, you require a return of 11% on your investment. Year Project X
Consider the following two mutually exclusive projects. Whichever project you choose, if any, you require a return of 11% on your investment.
| Year | Project X | Project Y |
| 0 | -$291,000 | -$41,600 |
| 1 | $37,000 | $20,000 |
| 2 | $55,000 | $17,600 |
| 3 | $55,000 | $17,200 |
| 4 | $366,000 | $14,000 |
- If you apply the payback criterion, which investment will you choose? Why?
- If you apply the discounted payback criterion, which investment will you choose? Why?
- If you apply the NPV criterion, which investment will you choose? Why?
- If you apply the IRR criterion, which investment will you choose? Why?
- If you apply the profitability index criterion, which investment will you choose? Why?
- Based on your above answers, which project will you finally choose? Why?
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R In Finance And Economics A Beginners Guide
Authors: Abhay Kumar Singh, David Edmund Allen
1st Edition
9813144467, 978-9813144460
