Make a comparison of two mutually exclusive investments, expected cash flows are presented in Table 1 to 1

Cost of equity of the company in which the investment would be realized is 11%.

Discuss the results of all methods used.

(Recommended methods: net cash income, average annual return, payback method,

Try to apply the EVA method.

Investment XAX ABY CF1 CF2 CF3 CF4 CFS 100 100 110 120 100 100 80 80 Net cash income Investment CF1 CF2 CF3 CF4 CF5 100 100 110 120 350 ABY 100 100 320 Average annual return InvestmentCF XAX ABY CF per year Average annual return Average payback time 450 90 420 84% 1,19047619 Payback method Investment I CF1 CF2 CF3 CF5 100 100 100 100 120 350 100 110 XAX cum ABY ABY cum 120 230 100 0 160 240 320 DEVA Simplifying assumptions: depreciations - straiht live method tax 20 % Investment CF1 CF2 CF3 CF4 CFS XAX 100 100 110 120 depreciation capital WACC NOPAT EVA DEVA 100 60 1196 1196 1196 1196 1196 39,2 ABY 100 100 80 80 depreciation capital WACC NOPAT EVA 100 60 1196 1196 1196 1196 1196 39,2 41,4 43,6 45,8