Question: Question 1: Consider the following mutually exclusive projects: You have just been hired as a senior financial manager of JasNav Inc. Three investments have been
Question 1:
Consider the following mutually exclusive projects:
You have just been hired as a senior financial manager of JasNav Inc. Three investments have been presented in front of you.
| Year | Investment A | Investment B | Investment C |
| 0 | -250,000 | -50,000 | -300,000 |
| 1 | 55,000 | 10,000 | -230,000 |
| 2 | 21,000 | 15,000 | 195,000 |
| 3 | 45,000 | 21,000 | 178,500 |
| 4 | 55,000 | 19,000 | 135,000 |
| 5 | 265,000 | 14,000 | 115,000 |
Whichever project you choose, if any, you require a 12% return on your investment.
Required:
- What is the payback period for each project?
- What is the NPV for each project?
- What is the IRR for each project?
- What is the profitability index for each project?
- Based on your answers in (1) through (4), which project will you finally choose? Explain.
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