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In: Finance

a. You are planning an investment in a project with an initial cost of $ 80,000....

a. You are planning an investment in a project with an initial cost of $ 80,000. That project is expected to produce an NCF of $ 20,000 annually for the next six years. your expected rate of return is 10%. Compute for that project the following: payback period, net present value, internal rate of return, and profitability index.

b. A company is considering two independent projects between them. The initial cost for project A is $ 50,000 and for project B it is $ 70,000. Project A offers an NCF of $ 12,000 annually for the next six years. Project B offers an NCF of $ 13,000 annually for the next six years. The expected return by the company is 12%. For said company compute the following: net present value, internal rate of return, and profitability index. Also indicate if the company should accept the projects and if so, which one should accept.

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jeff jeffy answered 1 year ago
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