Question
Thomas Company is considering two following independent projects. The firm has a 12% cost of capital. Cash inflows Initial investment Year 1 Year 2 Year
Thomas Company is considering two following independent projects. The firm has a 12% cost of capital.
| Cash inflows | Initial investment | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Project A | $130000 | $25000 | $35000 | $45000 | $50000 | $55000 |
| Project B | $85000 | $40000 | $35000 | $30000 | $10000 | $5000 |
a. Calculate the NPV of each project and assess its acceptability.
b. Calculate the IRR for each project and assess its acceptability.
c. Evaluate and discuss the rankings of NPV and IRR of the two projects on the basis of your finding.
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Stock Market Investing For Beginners
Authors: George Graham
1st Edition
1914346432, 978-1914346439
