Question
Farrah Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%.
Farrah Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%.
Project 1 --- Initial investment = $185,000 and Cash inflow year 1 = $230,000
Project 2 --- Initial investment = $1,100,000 and Cash inflow year 1 = $1,450,000
Compute the following for each project:
- NPV (net present value)
- PI (profitability index)
- IRR (internal rate of return)
Which project should be selected? Why?
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The Legal Environment Today Summarized Case Edition
Authors: Roger LeRoy Miller
8th Edition
130526276X, 978-1305279407, 1305279409, 978-1305704930, 1305704932, 978-1305262768
