Question: A firm is evaluating two projects, K and L, with an initial investment of $200,000. The projects have the following cash flows: Year Project K
A firm is evaluating two projects, K and L, with an initial investment of $200,000. The projects have the following cash flows:
Year | Project K | Project L |
1 | $75,000 | $20,000 |
2 | $75,000 | $50,000 |
3 | $75,000 | $90,000 |
4 | $75,000 | $70,000 |
5 | $75,000 | $40,000 |
The discount rate is 13%.
Required: a. Calculate for each project:
- Simple payback period
- Discounted payback period
- Net present value
- Internal rate of return
- Profitability index b. Provide a recommendation based on your findings.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
Study Help