Question: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $430,000 $42,500 1 41,500 20,900 2 64,500 12,800 3 81,500
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $430,000 $42,500 1 41,500 20,900 2 64,500 12,800 3 81,500 21,100 4 545,000 17,900 The required return on these investments is 10 percent. 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).) Payback period Project A years Project B 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 $ (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
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