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The company has 2 proposed projects. Here are the projects net cash flows (in thousands of dollars). The CFO has determined the weighted average cost
- The company has 2 proposed projects. Here are the projects net cash flows (in thousands of dollars). The CFO has determined the weighted average cost of capital to be 10 percent.
| Expected Net Cash Flow | ||
| Year | Project L | Project S |
| 0 | ($100) | ($100) |
| 1 | 35 | 60 |
| 2 | 75 | 75 |
| 3 | 150 | 125 |
| 4 | 50 | 100 |
- What is the payback period for projects L & S?
- What is the net present value (NPV) of each project?
- What is the internal rate of return (IRR) for each project?
- What is the modified internal rate of return (MIRR) for each project?
- Which method is the best? Why?
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