Question: Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) Cash Flow (B) -$430,000 -$42,500 41,500 20,900 64,500 12,800

 Consider the following two mutually exclusive projects: Year 0 1 2
3 4 Cash Flow (A) Cash Flow (B) -$430,000 -$42,500 41,500 20,900

Consider the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) Cash Flow (B) -$430,000 -$42,500 41,500 20,900 64,500 12,800 81,500 21,100 545,000 17,900 The required return on these investments is 10 percent. ces Required: (a) What is the payback period for each project? (Do not round Intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Project A Project B Payback period years years (b) What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Net present value Project A $ Project B $ your answers to 4 Gecimai places (e.g. 32.10).) Project A Project B Net present value $ $ (c) What is the IRR for each project? (Do not round Intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Internal rate of return % % Project A Project B (d) What is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32,161).) Profitability index Project A Project B (e)Based on your answers in (a) through (d), which project will you finally choose? (Click to select)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!