Question: 2. ABC Plc is considering an investment between two mutually exclusive projects with the following annual cash flows: ANNUAL CASH FLOWS Year Project A Project


2. ABC Plc is considering an investment between two mutually exclusive projects with the following annual cash flows: ANNUAL CASH FLOWS Year Project A Project B 0 $-50,000 $-80,000 1 30,000 40,000 30,000 40,000 3 30,000 40,000 30,000 40,000 5 30,000 40,000 2 4 ABC Pic requires a 16 percent rate of return on projects of this nature. Required (36 points): a. Compute the NPV of both projects (6 points). b. Compute the internal rate of return on both projects (6 points) C. Compute the profitability index of both projects (6 points). d. Compute the non-discounted payback period on both projects (6 points). e. Compute the discounted payback period on both projects (6 points). f. Which of the two projects, if any, should ABC Plc accept? Why? (6 points)
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