Question
XYZ Corporation is evaluating two potential projects with the following cash flows: Year Project 1 Project 2 0 -50,000 -40,000 1 10,000 10,000 2 15,000
XYZ Corporation is evaluating two potential projects with the following cash flows:
Year | Project 1 | Project 2 |
0 | -₹50,000 | -₹40,000 |
1 | ₹10,000 | ₹10,000 |
2 | ₹15,000 | ₹15,000 |
3 | ₹20,000 | ₹20,000 |
4 | ₹30,000 | ₹25,000 |
Requirements:
- Calculate the Payback Period for both projects.
- Determine the Discounted Payback Period at a 9% discount rate.
- Compute the NPV at 9% for each project.
- Identify the IRR for each project.
- Which project would you recommend based on the Payback Period and NPV?
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Corporate Finance Principles and Practice
Authors: Denzil Watson, Antony Head
7th edition
1292103035, 978-1292103082, 1292103086, 978-1292103037
