Phoenix Company is considering two mutually exclusive investments, Project P and Project Q. The expected cash flows of these projects are as follows:

a) Find the NPV for projects P and Q.

b) Find the IRR of each project?

c) Which project would you choose if the cost of capital is 10 percent? 20 percent?

d) What is each project's MIRR if the cost of capital is 12 percent?

e) Calculate the payback period for each project

Instructions

1. Give step by step explanation while answering each question. Also, do not use any softwares to solve this question.

2. Firstly, solve the question taking cost of capital as 20%. Then solve the question by taking 10% as the cost of capital.

Year Project Q () (1,600) 200 0 1 Project P () (1,000) (1,200) (600) (250) 2,000 4,000 2 400 3 600 800 4 5 100