Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A)...

 

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Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$300,000 20,000 50,000 50,000 390,000 Cash Flow (B) - $40,000 19,000 12,000 18,000 10,500 Whichever project you choose, if any, you require a 15 percent return on your investment. 1. Calculate the payback period, discounted payback period, PI, internal rate of return, and net present value of the projects. Also tell which project you will choose based on each criterion which project you will choose overall. 2. Make NPV profile chart and find cross-over point. Also explain criteria for accepting rejecting the project based on discount rate. Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$300,000 20,000 50,000 50,000 390,000 Cash Flow (B) - $40,000 19,000 12,000 18,000 10,500 Whichever project you choose, if any, you require a 15 percent return on your investment. 1. Calculate the payback period, discounted payback period, PI, internal rate of return, and net present value of the projects. Also tell which project you will choose based on each criterion which project you will choose overall. 2. Make NPV profile chart and find cross-over point. Also explain criteria for accepting rejecting the project based on discount rate.

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To analyze the two mutually exclusive projects lets calculate the payback period discounted payback period profitability index PI internal rate of return IRR and net present value NPV for each project ... View the full answer