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excel will do For the following two projects, determine the 1. Payback Period 2. Discounted Payback 3. Net Present Value 4. Profitability Index (Benefit-Cost Ratio)
excel will do
For the following two projects, determine the 1. Payback Period 2. Discounted Payback 3. Net Present Value 4. Profitability Index (Benefit-Cost Ratio) 5. Internal Rate of Return 6. Modified Internal Rate of Return Project A Project B Year Cash Flow Cash Flow Net Income Net Income 0 1 2 3 4 Risk Index 5,000 5,000 5000 5,000 (15,000) 6,000 6,000 6,000 6,000 3,000 5,000 7,000 11,000 (19,000) 4,000 6,000 8,000 12,000 1.80 .60 The firm's cost of capital k, is 15% and the risk free rate Rr is 10%. The firm assesses risk and assigns a risk index to determine a risk adjusted discount rate. An index of 1.0 would be assigned to an average risk project. To determine risk adjusted rates the firm uses the following equation: Risk Adjusted Rate (RADR) = Rp + [Risk Index (k- Rr) Task: Rank the projects in accordance with each method of analysis Step by Step Solution
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