Question: Analyze the following projects: Year Project M Project N Project O 0 -5,000 -6,000 -7,000 1 1,000 2,000 2,500 2 2,000 2,500 3,000 3 3,000
Analyze the following projects:
Year | Project M | Project N | Project O |
0 | -₹5,000 | -₹6,000 | -₹7,000 |
1 | ₹1,000 | ₹2,000 | ₹2,500 |
2 | ₹2,000 | ₹2,500 | ₹3,000 |
3 | ₹3,000 | ₹3,000 | ₹4,000 |
4 | ₹4,000 | ₹4,500 | ₹5,000 |
Requirements:
- Calculate the Payback Period for each project.
- Find the Discounted Payback Period at 11% cost of capital.
- Compute the NPV for each project at 11%.
- Identify the IRR for each project.
- Which project would you recommend if the firm’s required payback period is 3 years?
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