3. Your company has to choose between the two following projects. The required rate of return...
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3. Your company has to choose between the two following projects. The required rate of return is 10%. a. Year 0 1 C. 2 3 Project I -$65,000 31,500 31,500 31,500 Calculate the profitability index for both projects. b. Calculate the net present value (NPV) for both projects. Calculate the internal rate of return (IRR) for both projects. d. Which project should you choose? Why? Project II -$49,800 24,900 24,900 24,900 (4 marks) (4 marks) (5 marks) (3 marks) 3. Your company has to choose between the two following projects. The required rate of return is 10%. a. Year 0 1 C. 2 3 Project I -$65,000 31,500 31,500 31,500 Calculate the profitability index for both projects. b. Calculate the net present value (NPV) for both projects. Calculate the internal rate of return (IRR) for both projects. d. Which project should you choose? Why? Project II -$49,800 24,900 24,900 24,900 (4 marks) (4 marks) (5 marks) (3 marks)
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a The profitability index PI for a project is calculated by dividing the present value of future cas... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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