Question
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $300,000 $40,000 1 20,000 19,000 2 50,000 12,000 3 50,000
Consider the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) |
0 | $300,000 | $40,000 |
1 | 20,000 | 19,000 |
2 | 50,000 | 12,000 |
3 | 50,000 | 18,000 |
4 | 390,000 | 10,500 |
Whichever project you choose, if any, you require a 15 percent return on your investment. |
Required: |
(a) | The payback period for Projects A and B is and years, respectively.(Round your answers to 2 decimal places. (e.g., 32.16)) |
(b) | The discounted payback period for Projects A and B is and years, respectively. (Round your answers to 2 decimal places. (e.g., 32.16)) |
(c) | The NPV for Projects A and B is $ and $, respectively. (Do not include the dollar sign ($). Round your answers to 2 decimal places. (e.g., 32.16)) |
(d) | The IRR for Projects A and B is percent and percent, respectively. (Do not include the percent sign (%). Round your answers to 2 decimal places. (e.g., 32.16)) |
(e) | The profitability index for Projects A and B is and , respectively. (Round your answers to 3 decimal places. (e.g., 32.161)) |
(f) | Based on your answers in (a) through (e), you will finally choose Projec |
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