Question: I need answers to the following question marks (?) Problem 9-17 Comparing Investment Criteria [LO1, 2, 3, 5, 7] Consider the following two mutually exclusive
I need answers to the following question marks (?)
Problem 9-17 Comparing Investment Criteria [LO1, 2, 3, 5, 7]
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) | |||||
| 0 | $ | 346,000 | $ | 48,000 | |||
| 1 | 49,000 | 24,400 | |||||
| 2 | 69,000 | 22,400 | |||||
| 3 | 69,000 | 19,900 | |||||
| 4 | 444,000 | 15,000 | |||||
| Whichever project you choose, if any, you require a 16 percent return on your investment. |
| a-1 | What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| Payback period | ||
| Project A | years 3.36 | |
| Project B | years 2.06 | |
| a-2 | If you apply the payback criterion, which investment will you choose? | ||||
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| b-1 | What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| Discounted payback period | ||
| Project A | years 3.85 | |
| Project B | years 2.81 | |
| b-2 | If you apply the discounted payback criterion, which investment will you choose? | ||||
|
| c-1 | What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| NPV | ||
| Project A | $ Need answer to this one | |
| Project B | $ 10717.35 | |
| c-2 | If you apply the NPV criterion, which investment will you choose? | ||||
|
| d-1 | What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
| IRR | ||
| Project A | % 19.66 | |
| Project B | % 27.75 | |
| d-2 | If you apply the IRR criterion, which investment will you choose? | ||||
|
| e-1 | What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) |
| Profitability index | ||
| Project A | ||
| Project B | ||
| e-2 | If you apply the profitability index criterion, which investment will you choose? | ||||
|
| f. | Based on your answers in (a) through (e), which project will you finally choose? Project A or Project B? |
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