Question: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 350,000 $ 50,000 1

Consider the following two mutually exclusive projects:

 

YearCash Flow (A) Cash Flow (B)
0–$350,000  –$50,000 
1 45,000   24,000 
2 65,000   22,000 
3 65,000   19,500 
4 440,000   14,600 
 

 

Whichever project you choose, if any, you require a 15% return on your investment.

 

a-1. What is the payback period for each project?

b-1. What is the discounted payback period for each project?

What is the NPV for each project?

What is the IRR for each project?

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