Question
The following net cash flows are projected for two separate projects. Your required rate of return is 12%. Year Project A Project B 0 ($150,000)
The following net cash flows are projected for two separate projects. Your required rate of return is 12%.
| Year | Project A | Project B |
|---|---|---|
| 0 | ($150,000) | ($400,000) |
| 1 | $30,000 | $100,000 |
| 2 | $30,000 | $100,000 |
| 3 | $30,000 | $100,000 |
| 4 | $30,000 | $100,000 |
| 5 | $30,000 | $100,000 |
| 6 | $30,000 | $100,000 |
a. Calculate the payback period for each project.
b. Calculate the NPV of each project.
c. Calculate the IRR of each project.
d. Which project(s) should accept?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Solution a To calculate the payback period for each project we need to determine the point at which the cumulative net cash flows become positive For ...
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Step: 2
Step: 3
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Linear Algebra A Modern Introduction
Authors: David Poole
3rd edition
9781133169574 , 978-0538735452
