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JKL Ltd. is analyzing two potential investments. The financial data is as follows: Project R Project S Cost of Capital 7% 9% Initial Investment $140,000
JKL Ltd. is analyzing two potential investments. The financial data is as follows:
Project R | Project S | |
Cost of Capital | 7% | 9% |
Initial Investment | $140,000 | $160,000 |
Cash Inflow Year 1 | $45,000 | $55,000 |
Cash Inflow Year 2 | $55,000 | $65,000 |
Cash Inflow Year 3 | $65,000 | $75,000 |
Requirements:
- Calculate the payback period for each project.
- Determine the NPV of each project.
- Compute the IRR for each project.
- Calculate the PI for each project.
- Recommend which project to proceed with and justify your decision.
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