Question
Dragon Products Company is considering two projects. The projects cash flows are as follows: EXPECTED NET CASH FLOWS YEAR PROJECT A PROJECT B 0 ($9300)
Dragon Products Company is considering two projects. The projects cash flows are as follows:
| EXPECTED NET CASH FLOWS | ||
| YEAR | PROJECT A | PROJECT B |
| 0 | ($9300) | (17,600) |
| 1 | 2700 | 3870 |
| 2 | 1930 | 2450 |
| 3 | 1500 | 4700 |
| 4 | 2800 | 4575 |
| 5 | 3200 | 2450 |
| Discount Rate for both pojects = 7.5% | ||
REQUIRED
-
Find the Payback Period of both projects
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What is the discounted PBP of both projects ?
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Calculate the Net Present Value of the two projects and decide which one is better?
-
What is the profitability index of both products ?
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What is the IRR of the project A only?
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Why is sunk cost not considered when deciding about selecting a project? Which cost is considered and why?
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
