Question
Scenario: A business is considering two projects, X and Y, each with different initial investments and cash inflows: Project X: Initial Investment: $15,000 Cash Inflows:
Scenario: A business is considering two projects, X and Y, each with different initial investments and cash inflows:
- Project X:
- Initial Investment: $15,000
- Cash Inflows: $5,000 annually for 4 years
- Project Y:
- Initial Investment: $18,000
- Cash Inflows: $6,000 annually for 4 years
Discount rate for both projects is 11%.
Requirements:
- Calculate the NPV for both projects.
- Compute the IRR for both projects.
- Determine the Payback Period for both projects.
- Calculate the PI for both projects.
- Decide which project should be selected and justify the decision.
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
12th edition
1285850033, 978-1305480698, 1305480694, 978-0357688236, 978-1285850030
