Sharpe Manufacturing is attempting to select the best of three mutually exclusive projects. The initial cash outflow

Question:

Sharpe Manufacturing is attempting to select the best of three mutually exclusive projects. The initial cash outflow and after-tax cash inflows associated with each project are shown in the following table.

Calculate the payback period for each project.
Calculate the NPV of each project, assuming that the firm has a cost of capital equal to 13%.
Calculate the IRR for each project.
Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...