Question
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 433,000 $ 44,000 1 40,000 21,200 2 66,000 12,500
Consider the following two mutually exclusive projects:
Year | Cash Flow (A) | Cash Flow (B) |
---|---|---|
0 | $ 433,000 | $ 44,000 |
1 | 40,000 | 21,200 |
2 | 66,000 | 12,500 |
3 | 83,000 | 22,600 |
4 | 548,000 | 19,400 |
The required return on these investments is 14 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?
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