Question: Capital Investment Analysis (in ): Projects Initial Outlay Year 1 Year 2 Year 3 Year 4 C -25,000 7,000 8,000 9,000 10,000 D -30,000 6,000
Capital Investment Analysis (in £):
Projects | Initial Outlay | Year 1 | Year 2 | Year 3 | Year 4 |
C | -£25,000 | £7,000 | £8,000 | £9,000 | £10,000 |
D | -£30,000 | £6,000 | £7,000 | £8,000 | £9,000 |
Required:
- Calculate the payback period for each project.
- Identify the preferred project if the standard payback period is 2.5 years.
- Compute the NPV at a discount rate of 11%.
- Determine the IRR for each project.
- Calculate the profitability index (PI) for both projects.
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