Question
Cummings Products Company is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: EXPECTED NET CASH FLOWS YEAR PROJECT A
Cummings Products Company is considering two mutually exclusive investments. The projects' expected net cash flows are as follows:
| EXPECTED NET CASH FLOWS | ||
| YEAR | PROJECT A | PROJECT B |
| 0 | -$300 | -$405 |
| 1 | -$387 | $134 |
| 2 | -$193 | $134 |
| 3 | -$100 | $134 |
| 4 | 600 | $134 |
| 5 | 600 | $134 |
| 6 | 850 | $134 |
| 7 | -$180 | 0 |
a. What is each projects NPV if each project's cost of capital was 12 percent? What is each projects NPV if each projects cost of capital was 18 percent?
b. What is each project's IRR?
c. What is the regular payback period for each of these two projects?
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Fundamentals Of Financial Planning
Authors: Michael A Dalton, Joseph Gillice
3rd Edition
1936602091, 9781936602094
