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Consider the following two mutually exclusive projects: Year Cash Flow(A) Cash Flow(B) 0 -52000 -50000 1 45000 25000 2 50000 40000 3 65000 19500 Whichever

Consider the following two mutually exclusive projects:

Year Cash Flow(A) Cash Flow(B)
0 -52000 -50000
1 45000 25000
2 50000 40000
3 65000 19500

Whichever project you choose, if any, you require a 12 percent return on your investment.

  • Use payback period criterion and make a choice. Payback period for project A _____ ; Payback period for project B _____
  • Using discounted payback period criterion, make a choice. Discounted payback period for project A _____; Discounted payback period for project B ______
  • What is the choice when you use NPV? NPV for project A _____, NPV for project B _____
  • How about IRR? IRR for project A _____ , IRR for project B _____
  • PI? PI for project A _____ , PI for project B _____
  • Final decision... Overall which project will you choose? _____

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