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2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS                                

2 POTENTIAL CAPITAL PROJECTS HAVE THE FOLLOWING ESTIMATED CASHFLOWS

                                                            PROJECT 1                            PROJECT 2

YEAR                                                                          CASHFLOW                           CASHFLOW

   1                                                                               $95,000                                   $112,000

   2                                                                               $150,000                                 $95,000

   3                                                                               $10,000                                   $85,000

   4                                                                               $12,000                                   $65,000

   5                                                                               $45,000                                   $10,000

   6                                                                               $198,000                                 $ 15,000

BOTH PROJECTS HAVE A COST OF $275,000. THE COST OF CAPITAL IS 11.5%

A.  Calculate the payback period for each project.  State if payback is acceptable for each project and state why.

B.  Calculate the NPV for each project.  State if NPV is acceptable for each project and state why.

C.  Calculate the IRR for each project.  State if IRR is acceptable for each project and state why.

D.  Calculate the PI for each project.  State if PI is acceptable for each project and state why.

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jeff jeffy answered 2 years ago
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