Question
Consider two projects, S and T. Project S requires an investment of $5,000 and returns $2,000 per year for 3 years. Project T costs $4,000
Consider two projects, S and T. Project S requires an investment of $5,000 and returns $2,000 per year for 3 years. Project T costs $4,000 and returns $1,500, $1,800, and $2,000 over 3 years.
- Calculate the NPV for each project at a discount rate of 11%.
- Determine the IRR for both projects.
- Compare the payback periods.
- Recommend the better project based on NPV and IRR analysis.
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077614041, 9780077446475, 77614046, 007744647X, 77647092, 978-0077647094
