Question
You are evaluating two mutually exclusive projects with the following cash flows: Year Project X Project Y 0 -$70,000 -$70,000 1 $20,000 $0 2 $20,000
You are evaluating two mutually exclusive projects with the following cash flows:
Year | Project X | Project Y |
0 | -$70,000 | -$70,000 |
1 | $20,000 | $0 |
2 | $20,000 | $0 |
3 | $20,000 | $0 |
4 | $20,000 | $0 |
5 | $20,000 | $110,000 |
Requirements:
- Calculate the Net Present Value (NPV) for both projects if the discount rate is 8%.
- Calculate the Internal Rate of Return (IRR) for both projects.
- Determine the Payback Period for each project.
- Beyond what level of required return (approximately) would you change your selection?
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Corporate Finance Principles and Practice
Authors: Denzil Watson, Antony Head
7th edition
1292103035, 978-1292103082, 1292103086, 978-1292103037
