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Four projects are available to you, with the cash flows shown in the following table. Year Project Cash Flows 0 1 2 3 4
Four projects are available to you, with the cash flows shown in the following table. Year Project Cash Flows 0 1 2 3 4 5 Discount Rate A B C D -100,000 -100,000 -25,000 -20,000 70,000 30,000 2,000 10,000 -55,000 80,000 12,000 4,000 25,000 20,000 10,000 68,000 1,000 80,000 12% 12% 15% 8% a. Calculate the following capital budgeting metrics for projects A, B and D: payback period, IRR(s), NPV and Profitability Index. b. Calculate the IRR(s) and the NPV for project C. c. Which project(s) will you choose if the four projects are independent of each other? d. Which project(s) will you choose if the four projects are mutually exclusive? Note. For simplicity, we measure the payback period in full years (so if a project's initial investment is not fully repaid by t = 3 but is more than fully repaid by t = 4, we will say that the payback period is four years, rather than incorporating fractional values and concluding that the payback period is 3.4 years, for example).
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