3.Consider the following two mutually exclusive projects: What is the payback pe

Question

3.Consider the following two mutually exclusive projects:

  

  

  

What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

  

What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

  

Year Cash Flow
(A) Cash Flow
(B) 0 –$ 359,000 –$ 45,500 1 36,000 23,100 2 56,000 21,100 3 56,000 18,600 4 431,000 13,700

Explanation / Answer

1a.

Cash flows for project A in 3 yrs: 36000 + 56000 + 56000 = $148000

Remaining flows in last year equal to initial cash flows = 359000

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