1. Consider the following two mutually exclusive projects (X and Y). Cash Flow (Y) - $...

 

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1. Consider the following two mutually exclusive projects (X and Y). Cash Flow (Y) - $ 34,000 Year 0 1 2 3 IRR Cash Flow (X) -$ 42,500 28,000 16,500 6,600 12.61% 6,500 14,000 24,400 12.47% Whichever project you choose, if any, you require a 10 percent return on your investment. a. Calculate the payback period for each project. (6 marks) b. Calculate the net present value (NPV) of each project (6 marks) c. Based on your answers in (a), (b) as well as the given IRR, which project will you finally choose? Explain. (3 marks) 1. Consider the following two mutually exclusive projects (X and Y). Cash Flow (Y) - $ 34,000 Year 0 1 2 3 IRR Cash Flow (X) -$ 42,500 28,000 16,500 6,600 12.61% 6,500 14,000 24,400 12.47% Whichever project you choose, if any, you require a 10 percent return on your investment. a. Calculate the payback period for each project. (6 marks) b. Calculate the net present value (NPV) of each project (6 marks) c. Based on your answers in (a), (b) as well as the given IRR, which project will you finally choose? Explain. (3 marks)

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PAYBACKPERIOD CALCULATIONS PROJECT X iinitial investment for year 042500 cash flow for year 128000 r... View the full answer