A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves...

 

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A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow Year 1 2 3 4 5 A $10,000 20,000 30,000 40,000 50,000 B $50,000 40,000 30,000 0 0 Evaluate each alternative based on a) Payback period, [4 marks, b2] b) Net present value (use a 10% discount rate), [4 marks, b2] C $25,000 25,000 25,000 25,000 25,000 D $0 0 45,000 55,000 60,000 c) Internal rate of return. [4 marks, b2] d) Use the evaluation above and generate a ranking of the projects based on each method. [2 marks, =1] A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow Year 1 2 3 4 5 A $10,000 20,000 30,000 40,000 50,000 B $50,000 40,000 30,000 0 0 Evaluate each alternative based on a) Payback period, [4 marks, b2] b) Net present value (use a 10% discount rate), [4 marks, b2] C $25,000 25,000 25,000 25,000 25,000 D $0 0 45,000 55,000 60,000 c) Internal rate of return. [4 marks, b2] d) Use the evaluation above and generate a ranking of the projects based on each method. [2 marks, =1]

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To evaluate each alternative A B C D based on the given criteria payback period net present value in... View the full answer