Consider the following two mutually exclusive projects: Whichever project you ch

Question

Consider the following two mutually exclusive projects: Whichever project you choose, if any, you require a 14 percent return on your investment. 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.) If you apply the payback criterion, which investment will you choose? What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) If you apply the discounted payback criterion, which investment will you choose? Project A Project B What is the NPV for each project? (Do not round intermediate calculations and round you answers to 2 decimal places, e.g., 32.16.) Project B Project A 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.) Project A Project B

Explanation / Answer

A-1

Year

A-2 we will choose Investment B as its payback period is lower.

B-1

B-2

Investment B should be selected as its discounted payback period is lower.

C-1

NPV A = 4740.42

NPV B = 11873.52

C-2 Project B should be selected as it has higher positive NPV

D-1  

A-1

Year

Cash flows Cummulative cashflows 1 35000 35000 2 55000 90000 3 55000 145000 4 430000 575000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.