There are three projects listed below. The firm’s required rate of return is 13%. Please show work.

Year	Project AB	Project LM	Project UV
0	$ (90,000)	$ (100,000)	$ (96,500)
1	39,000	0	(55,000)
2	39,000	0	100,000
3	39,000	147,500	100,000

a) Compute net present value and internal rate of return of each project

Project	AB	LM	UV
NPV
IRR

b) If three projects are mutually exclusive, which one should be chosen?

c) What is the discount rate when NPV_AB equals NPV_UV (i.e., crossover rate)?

 

 CF0=                        CF1=                                      CF2=                                 CF3=     

 

IRR=

d) Compute the traditional payback period for each project.

e) Please follow the steps below to compute modified IRR (MIRR) of Project UV.

1) PV of cash outflows:

2) FV of cash inflows:

3) MIRR:

Answer rating: 100% (QA)

To compute the net present value NPV and internal rate of return IRR of each project we will discount the cash flows using the firms required rate of return of 13 a Net Present Value NPV and Internal ... View the full answer