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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $311,361 $15,784 1 26,000 5,513 2 59,000 8,259 3 58,000
Consider the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) |
0 | $311,361 | $15,784 |
1 | 26,000 | 5,513 |
2 | 59,000 | 8,259 |
3 | 58,000 | 13,564 |
4 | 428,000 | 8,310 |
Whichever project you choose, if any, you require a 6 percent return on your investment. |
Required: |
(a) | What is the payback period for Project A? |
3.39 years 3.5 years 3.22 years 3.29 years 3.56 years |
(b) | What is the payback period for Project B? |
2.15 years 2.04 years 2.21 years 2.26 years 2.08 years |
(c) | What is the discounted payback period for Project A? |
3.44 years 3.37 years 3.55 years 3.65 years 3.72 years |
(d) | What is the discounted payback period for Project B? |
2.35 years 2.4 years 2.28 years 2.17 years 2.22 years |
(e) | What is the NPV for Project A? |
$145,721.54 $157,992.83 $148,789.37 $153,391.1 $161,060.65 |
(f) | What is the NPV for Project B ? |
$15,475.23 $15,180.47 $14,738.32 $14,296.17 $14,001.4 |
(g) | What is the IRR for Project A? |
19.95% 18.05% 19% 18.43% 19.57% |
(h) | What is the IRR for Project B? |
36.86% 39.9% 36.1% 39.14% 38% |
(i) | What is the profitability index for Project A? |
1.567 1.493 1.537 1.448 1.418 |
(j) | What is the profitability index for Project B? |
2.03 1.934 1.876 1.992 1.837 |
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