Question
X-treme Vitamin Company is considering two investments, both of which costs $20,000.The firms cost of capital is 15%. The cash flows are as follows Year
X-treme Vitamin Company is considering two investments, both of which costs $20,000.The firms cost of capital is 15%. The cash flows are as follows
| Year | Project A | Project B |
| 1 | 12000 | 10000 |
| 2 | 8000 | 6000 |
| 3 | 6000 | 16000 |
Show all workings please
What is the payback period for each project? Which project would you accept based on the payback period?
What is the discounted payback for each project? Which project would you accept based on the discounted payback criterion?
Calculate the NPV of each project? Whcih project would you choose based on the NPV criterion
Based on the IRR criteria which project would you choose if they were mutually exclusive ?
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The Money Markets Handbook A Practitioners Guide
Authors: Moorad Choudhry
1st Edition
0470821507, 978-0470821503
