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For each project, calculate the NPV , IRR, profitability index ( PI ) and the payback period. For each capital budgeting decision tool, indicate if
For each project, calculate the NPV IRR, profitability index PI and the payback period. For each capital budgeting decision tool, indicate if the project should be accepted or rejected, assuming that each project is independent of the others. Note: The venture capital folks, when considering payback period, have a firm maximum payback period of four years. This year payback period has no impact on other capital budgeting analysis techniques, each is to be considered on its own. In other words, yes, all cash flows need to be considered for NPV IRR, and PI Expected cash flows for the four potential projects that Baker is considering as shown below each project ends when its cash flows end: Year Project A Project B Project C Project D $$$$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Year Project A Project B Project C Project D Req. Return use decimals xxxx a NPV to nearest $ b NPV acceptreject a IRR xxxx b IRR acceptreject a PI show decimals, xxx b PI acceptreject a Payback Period xx years b Payback acceptreject
For each project, calculate the NPV IRR, profitability index PI and the payback period. For each capital budgeting decision tool, indicate if the project should be
accepted or rejected, assuming that each project is independent of the others.
Note: The venture capital folks, when considering payback period, have a firm maximum payback period of four years. This year payback period has no impact on other capital budgeting analysis techniques, each is to be considered on its own. In other words, yes, all cash flows need to be considered for NPV IRR, and PI
Expected cash flows for the four potential projects that Baker is considering as shown below each project ends when its cash flows end:
Year Project A Project B Project C Project D
$$$$
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $
$
$
$
Year Project A Project B Project C Project D
Req. Return use decimals xxxx
a NPV to nearest $
b NPV acceptreject
a IRR xxxx
b IRR acceptreject
a PI show decimals, xxx
b PI acceptreject
a Payback Period xx years
b Payback acceptreject
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