Your company is considering two projects, Project M and Project N, each of which requires an initial outlay of 50 million. The expected cash inflows
Your company is considering two projects, Project M and Project N, each of which requires an initial outlay of ₹50 million. The expected cash inflows from these projects are:
Year | Cashflow (in millions) | |
Project M | Project N | |
1 | 11 | 38 |
2 | 19 | 22 |
3 | 32 | 18 |
4 | 37 | 10 |
- What is the payback period for each of the projects?
- What is the discounted payback period for each of the projects if the cost of capital is 12 percent?
- If the two projects are independent and the cost of capital is 12 percent, which projects (s) should the firm invest in?
- If the two projects are mutually exclusive and the cost of capital is 10 percent, which project should the firm invest in?
- If the two projects are mutually exclusive and the cost of capital is 15 percent, which project should the firm invest in? ON EXCEL
- If the cost of capital is 14 percent, what is the modified IRR of each project?
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Authors: Eugene F. Brigham, Phillip R. Daves
12th edition
1285850033, 978-1305480698, 1305480694, 978-0357688236, 978-1285850030
