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P10-24 (similar to) All techniqueslong dash—Decision among mutually exclusive investments Pound Industries is attempting to select...

P10-24 (similar to)

All

techniqueslong dash—Decision

among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table.

Cash flows

Project A

Project B

Project C

Initial investment (CF)

$150,000

$190,000

Cash inflows

Initial investment (CF),

cash inflows (cf),t=1to 5

$50,000

$62,000

$63,000

a. Calculate the payback period for each project.

b. Calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to

12%.

c. Calculate the internal rate of return (IRR) for each project.

d. Indicate which project you would recommend.

a. The payback period of project A is

years. (Round to two decimal places.)

Expert Solution

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jeff jeffy answered 1 month ago

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