Assume that BigCo’s cost of capital for all the projects is 7 percent. Calculate the NPV, IRR, payback period, discounted payback, and profitability index for each project in Table 1. The firm requires a payback period of 2 years and a discounted payback period of 2.5years.
Answer to relevant Questionsa. IF the firm is not capital constrained and the projects in Table are independent, which projects should the firm undertake using the following criteria?i. NPVii. IRRiii. Payback periodiv. Discounted payback periodb. Are ...Calculate the crossover rate for projects B and C fromTable.If the NPV of a project is $5,090 and its after-tax initial investment is $10,050, what is its PI? Should the firm accept the project? Does the PI yield the same decision as the NPV? A project has an NPV of $50,000. Calculate the cost of capital of this project if it generates the following cash flows for six years after an initial investment of $200,000:Year 1: $50,000Year 2: $50,000Year 3: $30,000Year ...For each pair of investment opportunities, indicate if they are more likely to be mutually exclusive or independent projects. Explain your choices.a. Cruise line:i. Build a cruise ship to carry 10,000 passengersii. Build two ...
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