capital budgeting and structure

Project Description:

the sanders electric company is evaluating two projects for possible inclusion in the firm’s capital
budget. project m will require a $37,000 investment while project o’s investment will be $46,000.
after-tax cash inflows are estimated as follows for the two projects:
year project m project o
1 $12,000 $10,000
2 12,000 10,000
3 12,000 15,000
4 12,000 15,000
5 15,000

a. determine the payback period for each project.
b. calculate the net present value and profitability index for each project based on a 10 percent
cost of capital. which, if either, of the project is acceptable?
c. determine the internal rate of return and modified internal rate of return for projects m and o.
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Project Stats:

Price Type: Negotiable

Completed
Total Proposals: 1
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