Question
You are considering two mutually exclusive projects: Project X-10 is expected to generate cash flows of $3,250 each year of its 5 year life. The
You are considering two mutually exclusive projects:
Project X-10 is expected to generate cash flows of $3,250 each year of its 5 year life. The project will cost $11,000.
Project X-25 is expected to produce $8,000 in cash flows per year. It also has a 5 year life, and costs $27,750.
The Cost of Capital is 12% and these projects are of normal risk.
a.Calculate the NPV, IRR, and MIRR for each of the projects.
b. Given that they are mutually exclusive, which project should be selected based on each ranking method?
c.Now which project should be chosen? Why?
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Enterprise Risk Management In Finance
Authors: David L. Olson, Desheng Dash Wu
1st Edition
1349691038, 978-1349691036
