Capital Budgeting Exercise

NRJ & Co$.$ is considering Projects S and L$,$ whose cash flows are shown below. These projects

are mutually exclusive, equally risky, and not repeatable. Find the NPV$,$ IRR and Payback

for each project at the three WACCs. Choose a project.

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 $15\%.$

a$.$ Find the Internal Rate of Return $($IRR$).$

b$.$ Find the Net Present Values $($NPV$)$ for each project at the three WACCs.

c$.$ Calculate the Simple Payback.

Use a discount rate of $10\%$ to calculate the Discounted Payback for each project.

d$.$ What is the MIRR of each project? Use $10\%$ as the rate for Compounding?

e$.$ Which project would you ultimately choose and why $($justify your answer$)?$