ABC plc is comparing two investment projects. The expected cash flows are given below. Assume the...

 

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ABC plc is comparing two investment projects. The expected cash flows are given below. Assume the cost of capital is 10 per cent. A) Calculate the payback period, net present value, internal rate of return and the profitability index of each project. B) Which project of the two would you choose? WHY? C) Do you expect to have a multiple IRR problem? Explain D) What is the value of the cross over point, if exist? Period Project A Project B 0 ($55,000) ($50,000) 1 $10,000 $20,000 2 $25.000 $20,000 3 $25,000 $20,000 4 $1.500 $5,000 ABC plc is comparing two investment projects. The expected cash flows are given below. Assume the cost of capital is 10 per cent. A) Calculate the payback period, net present value, internal rate of return and the profitability index of each project. B) Which project of the two would you choose? WHY? C) Do you expect to have a multiple IRR problem? Explain D) What is the value of the cross over point, if exist? Period Project A Project B 0 ($55,000) ($50,000) 1 $10,000 $20,000 2 $25.000 $20,000 3 $25,000 $20,000 4 $1.500 $5,000

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To answer your questions lets go step by step for each investment project Given Cost of Capital 10 P... View the full answer