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Consider the following two projects. The cost of capital for both projects is 15%. Project Year 0 1 2 3 4 5 Alpha -55,000 15,000
- Consider the following two projects. The cost of capital for both projects is 15%.
| Project | Year 0 | 1 | 2 | 3 | 4 | 5 |
| Alpha | -55,000 | 15,000 | 14,000 | 22,000 | 30,000 | 35,000 |
| Gamma | -80,000 | 40,000 | 30,000 | 25,000 | 25,000 | 20,000 |
- Calculate the IRR for each project and determine which one is better.
- Calculate the NPV for each project and determine which one is better.
- Based on profitability index method, which project is better?
- Overall, which project should be accepted assuming they are mutually exclusive? Why?
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Inside Company Valuation
Authors: Angelo Corelli
1st Edition
3319537822, 9783319537825
