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Cummings Products Company is considering two projects. The projects' cash flows are as follows: EXPECTED NET CASH FLOWS YEAR PROJECT A PROJECT B 0 ($3300)
Cummings Products Company is considering two projects. The projects' cash flows are as follows: EXPECTED NET CASH FLOWS YEAR PROJECT A PROJECT B 0 ($3300) (2205) 1 700 870 2 930 450 3 500 700 4 800 575 5 1200 950 Discount Rate = 8% 1. Why is investment decision important to a management accountant? 2. What is the difference between a mutually exclusive project and an independent project? 3. Calculate the Net Present Value of the two projects and decide which one is better? 4. What is the IRR of the two projects? Why can IRR conflict with NPV? Which method will be more suitable if the two methods conflict? 5. Use a graph to find the IRR of the two projects (use different discount rates to be able to draw the graph] 6. What is the profitability index
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