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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $432,000 $43,500 1 40,500 21,100 2 65,500 12,600 3 82,500
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | $432,000 | $43,500 |
| 1 | 40,500 | 21,100 |
| 2 | 65,500 | 12,600 |
| 3 | 82,500 | 22,100 |
| 4 | 547,000 | 18,900 |
| The required return on these investments is 13 percent. | |
| 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.) |
| 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.) |
| c. | What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| d. | What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) |
| e. | Based on your answers in (a) through (d), which project will you finally choose? |
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Marketing
Authors: Roger Kerin, Steven Hartley, William Rudelius
16th Edition
1264218753, 978-1264218752
