Question
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 350,000 $ 50,000 1
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) | |||||
| 0 | –$ | 350,000 | –$ | 50,000 | |||
| 1 | 45,000 | 24,000 | |||||
| 2 | 65,000 | 22,000 | |||||
| 3 | 65,000 | 19,500 | |||||
| 4 | 440,000 | 14,600 | |||||
Whichever project you choose, if any, you require a 15% return on your investment.
a-1. What is the payback period for each project?
b-1. What is the discounted payback period for each project?
What is the NPV for each project?
What is the IRR for each project?
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Fundamentals of corporate finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
10th edition
978-1260013955, 78034639, 978-0078034633
