Question
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 430,000 $ 42,500 1 41,500 20,900 2 64,500 12,800
Consider the following two mutually exclusive projects:
Year | Cash Flow (A) | Cash Flow (B) |
---|---|---|
0 | $ 430,000 | $ 42,500 |
1 | 41,500 | 20,900 |
2 | 64,500 | 12,800 |
3 | 81,500 | 21,100 |
4 | 545,000 | 17,900 |
The required return on these investments is 10 percent.
What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
What is the NPV for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
What is the IRR for each project?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
What is the profitability index for each project?
Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.
Based on your answers in (a) through (d), which project will you finally choose?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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