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Capital Budgeting Methods Project S has a cost of $9,000 and is expected to produce benefits...

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.

Calculate the two projects' NPVs, assuming a cost of capital of 10%. Do not round intermediate calculations. Round your answers to the nearest cent.

Project S: $  ???

Project L: $  ???

Which project would be selected, assuming they are mutually exclusive?

Based on the NPV values, [SELECT: Project S, Project L] would be selected.

Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places.

Project S: ???  %

Project L: ???  %.

Which project would be selected, assuming they are mutually exclusive?

Based on the IRR values, [SELECT: Project S, Project L] would be selected.

Calculate the two projects' MIRRs, assuming a cost of capital of 10%. Do not round intermediate calculations. Round your answers to two decimal places.

Project S: ???  %

Project L: ???  %

Which project would be selected, assuming they are mutually exclusive?

Based on the MIRR values, [SELECT: Project S, Project L] would be selected.

Calculate the two projects' PIs, assuming a cost of capital of 10%. Do not round intermediate calculations. Round your answers to three decimal places.

Project S:   ???

Project L: ???

Which project would be selected, assuming they are mutually exclusive?

Based on the PI values, [SELECT: Project S, Project L] would be selected.

Which project should actually be selected?

[SELECT: Project S, Project L] should actually be selected.

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Expert Solution

jeff jeffy answered 3 months ago
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