Here are the expected net cash flow estimates (in thousands of dollars): Project L Project S...

 

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Here are the expected net cash flow estimates (in thousands of dollars): Project L Project S ($100) ($100) Year 0 2 10 60 3 252 70 50 80 Depreciation, salvage values, net working capital requirements, and tax effects are all included in these cash flows. 20 The company's chief financial officer made subjective risk assessments of each project and concluded that both projects have risk characteristics similar those of the firm as a whole. Unilate's required rate of return is 10 percent. You must now determine whether one or both of the projects should go forward. a. Find the payback periods for Project L and Project S. (5 Points) b. What is each project's NPV and IRR? (10 Points) c. Which project would you select and why? (5 Points) d. What if project S was riskier than project L and had a required retum of 12%. Which project would you select now and why? (5 Points) Here are the expected net cash flow estimates (in thousands of dollars): Project L Project S ($100) ($100) Year 0 2 10 60 3 252 70 50 80 Depreciation, salvage values, net working capital requirements, and tax effects are all included in these cash flows. 20 The company's chief financial officer made subjective risk assessments of each project and concluded that both projects have risk characteristics similar those of the firm as a whole. Unilate's required rate of return is 10 percent. You must now determine whether one or both of the projects should go forward. a. Find the payback periods for Project L and Project S. (5 Points) b. What is each project's NPV and IRR? (10 Points) c. Which project would you select and why? (5 Points) d. What if project S was riskier than project L and had a required retum of 12%. Which project would you select now and why? (5 Points)

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a To find the payback periods for Project L and Project S calculate the time it takes for each projects cash flows to recover the initial investment F... View the full answer