All techniques-decision among mutually exclusive investments??? Pound Industries is attempting to select the best of three mutually
Question:
All techniques-decision among mutually exclusive investments???
Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and? after-tax cash inflows associated with these projects are shown in the following table:
CASH FLOWS | PROJECT A | PROJECT B | PROJECT C |
INITIAL INVESTMENT (CF) | $90,000 | $130,000 | $120,000 |
CASH INFLOWS (CF), t=1 to 5 | $30,000 | $41,000 | $41,500 |
Calculate the payback period for each project.
payback period = initial investment / after-tax cash flow
initial investment of project A is:
round to the nearest dollar
after-tax cash flow of project A is:
round to the nearest dollar
payback period of project A is:
round to two decimal places
initial investment of project B is:
round to the nearest dollar
after-tax cash flow of project B is:
round to the nearest dollar
payback period of project B is:
round to two decimal places
initial investment of project C is:
round to the nearest dollar
after-tax cash flow of project C is:
round to the nearest dollar
payback period of project C is:
round to two decimal places
Calculate the net present value? (NPV) of each? project, assuming that the firm has a cost of capital equal to 15%.
NPV of project A: $
round to the nearest cent
NPV of project B: $
round to the nearest cent
NPV of project C: $
round to the nearest cent
Calculate the internal rate of return? (IRR) for each project.
IRR of project A: %
round to two decimals
IRR of project B: %
round to two decimals
IRR of project C: %
round to two decimals
Indicate which project you would recommend.
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter