Question: Consider the following two mutually exclusive projects: Year Gold Mine Project Potato Chip Factory Project 0 -250,000 -50,000 1 28,700 29,000 2 40,000 20,000 3
Consider the following two mutually exclusive projects:
| Year | Gold Mine Project | Potato Chip Factory Project |
| 0 | -250,000 | -50,000 |
| 1 | 28,700 | 29,000 |
| 2 | 40,000 | 20,000 |
| 3 | 56,000 | 17,500 |
| 4 | 326,000 | 16,300 |
Assume the required return is 13%
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Which project would the payback method tell you to choose?
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Which project would the NPV tell you to choose?
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Which project would the IRR tell you to choose?
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Which project would the MIRR tell you to choose?
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Calculate the payback for each project
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Calculate the discounted payback for each project
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Which project would the profitability index tell you to choose?
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