In: Finance
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.