Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -420,000 -71,000
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Question:
Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 -420,000 -71,000
1 72,000 31,000
2 92,000 29,000
3 72,000 26,500
4 447,000 21,600
Whichever project you choose, if any, you require a 15% return on your investment.
a. What is the NPV for each project?
b. What is the IRR for each project?
c. What is the profitability index for each project?
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