Question: STU Corporation is evaluating two projects. The financial data is as follows: Project G Project H Cost of Capital 9% 11% Initial Investment $160,000 $190,000
STU Corporation is evaluating two projects. The financial data is as follows:
Project G | Project H | |
Cost of Capital | 9% | 11% |
Initial Investment | $160,000 | $190,000 |
Cash Inflow Year 1 | $60,000 | $70,000 |
Cash Inflow Year 2 | $70,000 | $80,000 |
Cash Inflow Year 3 | $80,000 | $90,000 |
Requirements:
- Calculate the payback period for each project.
- Determine the NPV of each project.
- Compute the IRR for each project.
- Calculate the PI for each project.
- Make a recommendation based on the financial analysis.
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