DISCUSS QUESTION #3 (Refer to Handouts for Chapter 11 posted in Content) The following TWO projects...

DISCUSS QUESTION #3 (Refer to Handouts for Chapter 11 posted in Content)

The following TWO projects are being considered in this year's capital budget.

PROJECT 1: Assume the Cost of Capital is 10% for this project

	cash flows
year		project
0		-34,000
1		17,000
2		15,000
3		13,000

PROJECT 2: This project has a life of 3 years. The initial investment is $15,000 with annual cash inflows of $7,000. Assume the Cost of Capital is 9% for this project.

REPLY POST: Question 3

1) Calculate the NPV for Project 1

2) Calculate the IRR and MIRR for Project 2

3) Based on your calculations, should these projects be accepted or rejected?

Solutions

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