Question
In: Finance
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0...
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | –$201,178 | –$15,104 |
| 1 | 25,700 | 4,731 |
| 2 | 55,000 | 8,951 |
| 3 | 56,000 | 13,135 |
| 4 | 413,000 | 8,126 |
| Whichever project you choose, if any, you require a 6 percent return on your investment. |
| a. What is the payback period for Project A? |
| b. What is the payback period for Project B? |
| c. What is the discounted payback period for Project A? |
| d. What is the discounted payback period for Project B? |
| e. What is the NPV for Project A? |
| f. What is the NPV for Project B ? |
| g. What is the IRR for Project A? |
| h. What is the IRR for Project B? |
| i. What is the profitability index for Project A? |
| j. What is the profitability index for Project B? |
Solutions
Expert Solution
| Answers | |
| a. What is the payback period for Project A? | 3.16 |
| b. What is the payback period for Project B? | 2.11 |
| c. What is the discounted payback period for Project A? | 3.25 |
| d. What is the discounted payback period for Project B? | 2.24 |
| e. What is the NPV for Project A? | 2,46,170.45 |
| f. What is the NPV for Project B ? | 14,790.52 |
| g. What is the IRR for Project A? | 34.00% |
| h. What is the IRR for Project B? | 39.00% |
| i. What is the profitability index for Project A? | 1.22 |
| j. What is the profitability index for Project B? | 0.98 |
jeff jeffy answered 1 year agoRelated Solutions
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What is the payback period for each project? (Do not
round intermediate calculations and round your answers to 2 decimal
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