Question
Innovative Enterprises is evaluating two investment opportunities: Year Investment M ($) Investment N ($) 0 -50,000 -60,000 1 20,000 25,000 2 25,000 30,000 3 30,000
Innovative Enterprises is evaluating two investment opportunities:
Year | Investment M ($) | Investment N ($) |
0 | -50,000 | -60,000 |
1 | 20,000 | 25,000 |
2 | 25,000 | 30,000 |
3 | 30,000 | 35,000 |
The discount rate is 8%.
Requirements: a) Calculate the payback period for each investment. b) Compute the IRR for both investments. c) Determine the NPV for both investments. d) Advise which investment should be chosen and justify your recommendation.
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Cost Accounting
Authors: William K. Carter
14th edition
759338094, 978-0759338098
