a. Find the Internal Rate of Return (IRR). Project S: % 19.86 Project L: % 15.66...

 

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a. Find the Internal Rate of Return (IRR). Project S: % 19.86 Project L: % 15.66 b. Find the Net Present Values (NPV) for each project at the three WACCs. Project S: 259.31, 159.79, 73.45 Project L: 350.16, 167.61, 17.79 c. Calculate the Simple Payback. Use a discount rate of 10% to calculate the Discounted Payback for each project. Project Discounted Payback Project S: 2.32 Years Project L: 1.99 Years d. What is the MIRR of each project? Use 10% as the rate for Compounding? Project S: 16.40% Project L: 12.95% e. Which project would you ultimately choose and why (justify your answer)? Project S seems to be the better option as it has a higher IRR and the NPV is higher at all three WACC's as well as a higher MIRR, so although it has a slightly longer payback period it is outweighed by the other values. I Year CFs CF₁ a. WACC = 5% b. WACC = 10% c. WACC = 15% Evaluate both projects at the following three weighted average cost of capital: (WACC) of 5%, 10 %, and 15%. 0 2 3 -$1,025 $650 $450 $250 -$1,025. $100 $300 $500 4 $50 $700 a. Find the Internal Rate of Return (IRR). Project S: % 19.86 Project L: % 15.66 b. Find the Net Present Values (NPV) for each project at the three WACCs. Project S: 259.31, 159.79, 73.45 Project L: 350.16, 167.61, 17.79 c. Calculate the Simple Payback. Use a discount rate of 10% to calculate the Discounted Payback for each project. Project Discounted Payback Project S: 2.32 Years Project L: 1.99 Years d. What is the MIRR of each project? Use 10% as the rate for Compounding? Project S: 16.40% Project L: 12.95% e. Which project would you ultimately choose and why (justify your answer)? Project S seems to be the better option as it has a higher IRR and the NPV is higher at all three WACC's as well as a higher MIRR, so although it has a slightly longer payback period it is outweighed by the other values. I Year CFs CF₁ a. WACC = 5% b. WACC = 10% c. WACC = 15% Evaluate both projects at the following three weighted average cost of capital: (WACC) of 5%, 10 %, and 15%. 0 2 3 -$1,025 $650 $450 $250 -$1,025. $100 $300 $500 4 $50 $700

Answer rating: 100% (QA)

c Simple Payback You seem to have already calculated the Discounted Payback not the Simple Payback Simple Payback ignores discounting and focuses on t... View the full answer