Question
Tech Innovators Ltd. is evaluating two investment opportunities, Project Alpha and Project Beta . Each requires an initial investment of $1,200,000. The after-tax cash inflows
Tech Innovators Ltd. is evaluating two investment opportunities, Project Alpha and Project Beta. Each requires an initial investment of $1,200,000. The after-tax cash inflows are:
Year | Project Alpha | Project Beta |
0 | -$1,200,000 | -$1,200,000 |
1 | $350,000 | $300,000 |
2 | $400,000 | $350,000 |
3 | $450,000 | $400,000 |
4 | $500,000 | $450,000 |
a. Calculate the payback period for both projects. b. Determine which project has a higher Internal Rate of Return (IRR).
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Principles of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter, Wajeeh Elali, Amer Al Roubaix
Arab World Edition
1408271583, 978-1408271582
