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Please show all calculations, thank you. You are considering an investment in two projects, A and B. both projects have an initial cash outlay of
Please show all calculations, thank you.
You are considering an investment in two projects, A and B. both projects have an initial cash outlay of $50,000 and the projected cash flows are as follows: Project B -50,000 35,000 30,000 25,000 20,000 20,000 Year 0 1 Project A 50,000 20,000 25,000 30,000 35,000 35,000 4 Assuming that the cost of capital (discount rate) is 15% a) b) c) d) Calculate the NPV for each project. Show all calculations in tabular form. (4 marks) Calculate the payback period and discounted payback period. Show all calculations in tabular form. (4 marks) What is the IRR for each project based on the discounted payback period (assuming that the project will take 5 years to pay back)? Show all calculations in tabular form. (4 marks) If the projects are mutually exclusive, which project should be selected and why? (2 marks) You are considering an investment in two projects, A and B. both projects have an initial cash outlay of $50,000 and the projected cash flows are as follows: Project B -50,000 35,000 30,000 25,000 20,000 20,000 Year 0 1 Project A 50,000 20,000 25,000 30,000 35,000 35,000 4 Assuming that the cost of capital (discount rate) is 15% a) b) c) d) Calculate the NPV for each project. Show all calculations in tabular form. (4 marks) Calculate the payback period and discounted payback period. Show all calculations in tabular form. (4 marks) What is the IRR for each project based on the discounted payback period (assuming that the project will take 5 years to pay back)? Show all calculations in tabular form. (4 marks) If the projects are mutually exclusive, which project should be selected and why? (2 marks)Step by Step Solution
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