Question
Part 2 - The second model is for a project for Gardial Fisheries. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net
Part 2 - The second model is for a project for Gardial Fisheries. Gardial Fisheries is considering two mutually exclusive investments. The projects expected net cash flows are as follows: Expected Net Cash Flows for the 7 year Project are: Project A $375, 300, 200, 100, 600, 600, 926 and, 200 Project B $575, 190, 190, 190, 190, 190, 190 and, 0 If each projects cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? Construct NPV profiles for Projects A and B. What is each projects IRR? What is the crossover rate, and what is its significance? What is each projects MIRR at a cost of capital of 12%? At r 18%? (Hint: Consider Period 7 as the end of Project Bs life.) What is the regular payback period for these two projects? (Hint: Excels PERCENTRANK function may not work correctly for Project A because it has nonnormal cash flows.) At a cost of capital of 12%, what is the discounted payback period for these two projects? What is the profitability index for each project if the cost of capital is 12
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