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Digg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($)...

Digg company is evaluation two projects for next year’s capital budgeting. The after-tax cash flow ($) (including depreciation) are following:

Project A                              Project B

Year 0    -6000 -17500

Year 1    2000                                       5600

Year 2    2000                                       5600

Year 3    2000                                       5600

Year 4    2000                                       5600

Year 5    2000                                       5600

Year 6    4000                                       9000

If company’s WACC is 13%, find NPV, IRR, Payback and discount payback for each project. If the projects are mutually exclusive what is your recommendation to the company.

Specific help and showing of work for the payback discount please!!

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Expert Solution

Project B should be selected as NPV is higher

jeff jeffy answered 2 years ago
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