Problem $10-10$

Capital Budgeting Methods

Project S has a cost of $$11,000$ and is expected to produce benefits $($cash flows$)$ of $$3,400$ per year for $5$ years. Project L costs $$23,000$ and is expected to produce cash flows of $$6,900$ per year for $5$ years.

Calculate the two projects' NPVs$,$ assuming a cost of capital of $14\%.$ Round your answers to the nearest cent.

Project S $

Project L $

Which project would be selected, assuming they are mutually exclusive?

Project L

Calculate the two projects' IRRs. Round your answers to two decimal places.

Project S

$\%$

Project L

$\%$

Which project would be selected, assuming they are mutually exclusive?

Project S

Calculate the two projects' MIRRs, assuming a cost of capital of $14\%.$ Round your answers to two decimal places.

Project S

$\%$

Project L

$\%$

Which project would be selected, assuming they are mutually exclusive?

Project S

Calculate the two projects' PIs, assuming a cost of capital of $14\%.$ Round your answers to two decimal places.

Project S

Project L

Which project would be selected, assuming they are mutually exclusive?

Project S

Which project should actually be selected?

Project L