Question: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$417,000 -$36,000 48,000 19,600 2 58,000 14,100 3 75,000 14,600 4
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) -$417,000 -$36,000 48,000 19,600 2 58,000 14,100 3 75,000 14,600 4 532,000 11,400 ONM The required return on these investments is 13 percent. a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) d. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) e. Based on your answers in (a) through (d), which project will you finally choose? years years a. Project A Project B b. Project A Project B C. Project A Project B d. Project A Project B e. %
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
