3) An investor has to pick one of the following three projects A, B or C....

  

Transcribed Image Text:

3) An investor has to pick one of the following three projects A, B or C. The cash flows from each project are given in the table below. (10 Marks) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Project A -100 50 30 20 50 120 Project B -150 50 50 50 100 120 Project C -200 100 100 50 60 80 You can use excel to answer the following questions. a) What is the payback period of each project? According to the payback period which project would you prefer? b) What is the NPV of each project? According to the NPV which project would you prefer? c) What is the IRR of each project? According to the IRR which project would you prefer? 3) An investor has to pick one of the following three projects A, B or C. The cash flows from each project are given in the table below. (10 Marks) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Project A -100 50 30 20 50 120 Project B -150 50 50 50 100 120 Project C -200 100 100 50 60 80 You can use excel to answer the following questions. a) What is the payback period of each project? According to the payback period which project would you prefer? b) What is the NPV of each project? According to the NPV which project would you prefer? c) What is the IRR of each project? According to the IRR which project would you prefer?

Answer rating: 100% (QA)

To calculate the payback period NPV and IRR for each project we can use Excel Lets assume the discount rate is 10 a Payback Period To calculate the pa... View the full answer