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Given the following information on the expected cashflows from Project A and Project B, build a spreadsheet to answer the questions below. Year Project A
Given the following information on the expected cashflows from Project A and Project B, build a spreadsheet to answer the questions below.
Year | Project A CF | Project B CF |
0 | (100) | (100) |
1 | 10 | 70 |
2 | 60 | 50 |
3 | 80 | 20 |
- Calculate NPV, IRR, Payback Period, and the Profitability Index for each project. Assume a WACC of 8%.
- Calculate the cross-over rate. What does this tell you?
- Under each criteria in part a, which project would you choose? (a table would be helpful)
- Which method provides the best results? Explain.
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