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Problem 10-10 Capital Budgeting Methods Project S has a cost of $11,000 and is expected to...

Problem 10-10
Capital Budgeting Methods

Project S has a cost of $11,000 and is expected to produce benefits (cash flows) of $3,400 per year for 5 years. Project L costs $23,000 and is expected to produce cash flows of $6,900 per year for 5 years.

  1. Calculate the two projects' NPVs, assuming a cost of capital of 14%. Round your answers to the nearest cent.

    Project S $      
    Project L $      

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project S or Project L

  2. Calculate the two projects' IRRs. Round your answers to two decimal places.
    Project S %
    Project L %

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project S or Project LI

  3. Calculate the two projects' MIRRs, assuming a cost of capital of 14%. Round your answers to two decimal places.

    Project S %
    Project L %

    Which project would be selected, assuming they are mutually exclusive?
    -Select-Project S or Project L

  4. Calculate the two projects' PIs, assuming a cost of capital of 14%. Round your answers to two decimal places.
    Project S     
    Project L     

    Which project would be selected, assuming they are mutually exclusive?
    -Select- Project S or Project L

  5. Which project should actually be selected?
    -Select-Project S or Project L

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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