Question
Two investment projects are being evaluated: Year Project X1 Project Y1 0 -$100,000 -$100,000 1 $30,000 $0 2 $30,000 $0 3 $30,000 $0 4 $30,000
Two investment projects are being evaluated:
Year | Project X1 | Project Y1 |
0 | -$100,000 | -$100,000 |
1 | $30,000 | $0 |
2 | $30,000 | $0 |
3 | $30,000 | $0 |
4 | $30,000 | $0 |
5 | $30,000 | $200,000 |
Requirements:
- Compute the NPV for both projects with a discount rate of 11%.
- Calculate the IRR for both projects.
- Determine the Profitability Index for each project.
- Decide which project should be accepted based on the calculations and justify your decision.
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
