7. A firm with a 13% WACC is evaluating two projects for this year\'s capital bu

Question

7. A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows:


0 1 2 3 4 5
Project A -$3,000 $1,000 $1,000 $1,000 $1,000 $1,000
Project B -$9,000 $2,800 $2,800 $2,800 $2,800 $2,800




a.Calculate NPV for each project. Round your answers to the nearest cent.
Project A $
Project B $
Calculate IRR for each project. Round your answers to two decimal places.
Project A %
Project B %

Calculate MIRR for each project. Round your answers to two decimal places.
Project A %
Project B %

Calculate payback for each project. Round your answers to two decimal places.
Project A years
Project B years

Calculate discounted payback for each project. Round your answers to two decimal places.
Project A years
Project B years

Explanation / Answer

a.Calculate NPV for each project. Round your answers to the nearest cent. Project A $ : 517.23 Project B $ : 848.25 Calculate IRR for each project. Round your answers to two decimal places. Project A % : 19.86% Project B % : 16.80% Calculate MIRR for each project. Round your answers to two decimal places. Project A % : 16.65% Project B % : 15.05% Calculate payback for each project. Round your answers to two decimal places. Project A years : 3 Project B years : 3.94 Calculate discounted payback for each project. Round your answers to two decimal places. Project A years : 4.11 Project B years : 4.69

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