The D. Dorner Farms Corporation is considering purchasing one of two fertilizer- herbicides for the upcoming year. The more expensive of the two is better and will produce a higher yield. Assume these projects are mutually exclusive and that the required rate of return is 10 percent. Given the following free cash flows:
a. Calculate the NPV of each project.
b. Calculate the PI of each project.
c. Calculate the IRR of each project.
d. If there is no capital- rationing constraint, which project should be selected? If there is a capital- rationing constraint, how should the decision be made?

  • CreatedSeptember 11, 2015
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