Question: be sure to Tow your lor inputs and/or the equation with values for Tun credit What does show your work mean: Show your inputs and/or
be sure to Tow your lor inputs and/or the equation with values for Tun credit What does show your work" mean: Show your inputs and/or the calculation. For capital budgeting problems you will be using the Cash Flow register of your financial calculator, show your inputs (CFO = _ CF1 = _F01 = _ and so on. Go to the Practice Problems for this module and see how I am presenting the solutions, that is your best guide. Also, if you haven't worked the Practice Problems yet, please do so before attempting the homework. All problems here are variations of the Practice Problems, for which full solutions are provided. 1 Given the following cash flows for two projects available to ABC Corp. Assumed required return: 15% 15% Project A Project B Year Cash Flow Cash Flow 0 1 2 3 4 5 a What is the NPV of each project? $600,000 50,000 75,000 300,000 300,000 350,000 -$200,000 100,000 100.000 100.000 0 0 b What is the IRR for each project? (you have already shown your inputs under the NPV part of the problem, no need to repeat) What is the payback period for each project? Here you need to follow the practice problem format to show how you arrived at your solution) 2 How can we account for risk under each of the three methods (payback period, IRR, and NPV)
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