Question: Future Cash Flows (in $) Year Project M Project N 0 -15,000 -18,000 1 3,000 4,000 2 5,000 6,000 3 6,000 7,000 4 8,000 10,000
Future Cash Flows (in $)
Year | Project M | Project N |
0 | -15,000 | -18,000 |
1 | 3,000 | 4,000 |
2 | 5,000 | 6,000 |
3 | 6,000 | 7,000 |
4 | 8,000 | 10,000 |
Requirements:
- Calculate the payback period for each project.
- Select the project if the standard payback period is 3 years.
- Compute the discounted payback period at a 9% discount rate.
- Compute the IRR for each project.
- Determine which project to recommend based on IRR.
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