Question
PQR Ltd. has two investment options. Below are the details: Project E Project F Cost of Capital 8% 10% Initial Investment $130,000 $150,000 Cash Inflow
PQR Ltd. has two investment options. Below are the details:
Project E | Project F | |
Cost of Capital | 8% | 10% |
Initial Investment | $130,000 | $150,000 |
Cash Inflow Year 1 | $55,000 | $65,000 |
Cash Inflow Year 2 | $65,000 | $75,000 |
Cash Inflow Year 3 | $75,000 | $85,000 |
Requirements:
- Calculate the payback period for each project.
- Determine the NPV of each project.
- Compute the IRR for each project.
- Calculate the PI for each project.
- Advise which project should be selected and justify your recommendation.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
