Question

In: Accounting

Tyson is considering 2 alternative investments (A and B). The cost of each is $100,000. The...

Tyson is considering 2 alternative investments (A and B). The cost of each is $100,000. The annual net cash flows for the 5 year investment are:

Year Investment A Investment B
1 20,000 $10,000
2 30,000 60,000
3 40,000 60,000
4 40,000 20,000
5 30,000 10,000

Answer the following:

Payback period for Alternative 'A'[Q1] format: x.xx

Payback period for Alternative 'B'[Q2] format: x.xx

NPV for Alternative 'A' at 10% discount rate[Q3] format: $xx,xxx

NPV for Alternative 'B' at 10% discount rate[Q4] format: $xx,xxx

IRR for Alternative 'A'[Q5] format: xx.xx%

IRR for Alternative 'B'[Q6] format: xx.xx%

Profitability Index Alternative 'A'[Q7] format: x.xx

Profitability Index Alternative 'B'[Q8] format: x.xx

Solutions

Expert Solution

Payback Periods of

Investment A: 3 years and 3 months

Investment B: 2 years and 6months

Net Present Value of

Investemt A: $118950

Investment B : $ 123580

Profitability Index of

Investment A : 1.19

Investment B : 1.24


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