Cash flows from two investment opportunities are given below.

Year CFA CFB

0 -$1,000 -$1,000

1 +$100+$800

2 +$200+$300

3 +$400+$300

4 +$700+$200

5 +$800+$200

If the cost of capital is 10%, what is the NPV, IRR and Payback period of each investment? What is the appropriate investment choice if (i) the investments are mutually exclusive, or (ii) the investments are independent? Please justify your answer.

Answer rating: 100% (QA)

To calculate the NPV IRR and payback period for each investment opportunity we need to use the given cash flows and the cost of capital discount rate ... View the full answer