Question 2 Assume the following cash flows for two projects, Project M and Project N: Year Project
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Question:
Question 2
Assume the following cash flows for two projects, Project M and Project N:
Year | Project M | Project N |
0 | -80000 | -140000 |
1 | 20000 | 30000 |
2 | 25000 | 35000 |
3 | 30000 | 40000 |
4 | 35000 | 45000 |
5 | 40000 | 50000 |
6 | 45000 | 55000 |
Requirements:
- Calculate the NPV for both projects with a discount rate of 12%.
- Determine the IRR for each project.
- Calculate the payback period for both projects.
- Discuss which project should be selected if they are independent.
- Recommend which project to choose if they are mutually exclusive.
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