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P9-17 Comparing Investment Criteria [LO1, 2, 3, 5, 7] Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $283,735
P9-17 Comparing Investment Criteria [LO1, 2, 3, 5, 7]
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | $283,735 | $15,867 |
| 1 | 25,200 | 4,455 |
| 2 | 53,000 | 8,907 |
| 3 | 57,000 | 13,964 |
| 4 | 417,000 | 9,604 |
| Whichever project you choose, if any, you require a 6 percent return on your investment. |
| Required: |
| (a) | What is the payback period for Project A? |
| (b) | What is the payback period for Project B? |
| (c) | What is the discounted payback period for Project A? |
| (d) | What is the discounted payback period for Project B? |
| (e) | What is the NPV for Project A? |
| (f) | What is the NPV for Project B ? |
| (g) | What is the IRR for Project A? |
| (h) | What is the IRR for Project B? |
| (i) | What is the profitability index for Project A? |
| (j) | What is the profitability index for Project B? |
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Investment Management
Authors: Stephen Lofthouse
2nd Edition
047149237X, 9780471492375
