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Problem 10-10 Capital Budgeting Methods Project S has a cost of $9,000 and is expected to...

Problem 10-10
Capital Budgeting Methods

Project S has a cost of $9,000 and is expected to produce benefits (cash flows) of $2,700 per year for 5 years. Project L costs $26,000 and is expected to produce cash flows of $7,100 per year for 5 years.

  1. Calculate the two projects' NPVs, assuming a cost of capital of 10%. Round your answers to the nearest cent.

    Project S $    
    Project L $    

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project SProject LItem 3

  2. Calculate the two projects' IRRs. Round your answers to two decimal places.
    Project S %
    Project L %

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project SProject LItem 6

  3. Calculate the two projects' MIRRs, assuming a cost of capital of 10%. Round your answers to two decimal places.

    Project S %
    Project L %

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project SProject LItem 9

  4. Calculate the two projects' PIs, assuming a cost of capital of 10%. Round your answers to two decimal places.
    Project S     
    Project L     

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project SProject LItem 12

    Which project should actually be selected?
    -Select-Project SProject LItem 13

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