Question: YZA Corporation is evaluating two projects. The details are given below: Project K Project L Cost of Capital 10% 9% Initial Investment $140,000 $160,000 Cash
YZA Corporation is evaluating two projects. The details are given below:
Project K | Project L | |
Cost of Capital | 10% | 9% |
Initial Investment | $140,000 | $160,000 |
Cash Inflow Year 1 | $55,000 | $65,000 |
Cash Inflow Year 2 | $65,000 | $75,000 |
Cash Inflow Year 3 | $75,000 | $85,000 |
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.
- Advise which project should be selected and justify your recommendation.
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