Question
Year Cash Flow A Cash Flow B 0 -$75,000 -$90,000 1 $20,000 $30,000 2 $25,000 $40,000 3 $35,000 $50,000 The cost of capital is 10%.
Year | Cash Flow A | Cash Flow B |
0 | -$75,000 | -$90,000 |
1 | $20,000 | $30,000 |
2 | $25,000 | $40,000 |
3 | $35,000 | $50,000 |
The cost of capital is 10%.
a) Calculate the NPV for both Project A and Project B.
b) Determine the IRR for both projects.
c) Decide which project to pursue based on NPV and IRR.
d) Provide a graphical representation of the cash flows and discuss the visual differences in payback periods.
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Gapenski's Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Kristin L. Reiter, Paula H. Song
7th Edition
1640551867, 9781640551862
