The followings are cash flows of two mutually exclusive projects; Projects I and II. Year Project I
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Question:
The followings are cash flows of two mutually exclusive projects; Projects I and II.
Year | Project I | Project II |
0 | -200,000 | -100,000 |
1 | 50,000 | 40,000 |
2 | 100,000 | 90,000 |
3 | 150,000 | 30,000 |
4 | 40,000 | 60,000 |
The cost of capital for the company is the same as what you have estimated in the previous question (use a round number, round up to the closest integer). Which project should the company select and why based on the following criteria
Payback period (The critical payback period is 2.5 years)
Net present value
Internal rate of return
Profitability index
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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