Question
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,300 per year for 5 years.
Calculate the two projects' NPVs, assuming a cost of capital of 12%. Round your answers to the nearest cent.
| Project S | $ |
| Project L | $ |
Which project would be selected, assuming they are mutually exclusive?
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?
Calculate the two projects' MIRRs, assuming a cost of capital of 12%. Round your answers to two decimal places.
| Project S | % |
| Project L | % |
Which project would be selected, assuming they are mutually exclusive?
Calculate the two projects' PIs, assuming a cost of capital of 12%. Round your answers to two decimal places.
| Project S | |
| Project L |
Which project would be selected, assuming they are mutually exclusive?
Which project should actually be selected?
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Fundamentals Of Financial Management
Authors: James C Van Horne
3rd Edition
0133393410, 978-0133393415
