Whichever project you choose, if any, you require a 6 percent return on your inv
ID: 2823557 • Letter: W
Question
Whichever project you choose, if any, you require a 6 percent return on your investment
Consider the following two mutually exclusive projects: Cash Flow (A) -$236,176 27,300 58,000 59,000 390,000 Cash Flow (B) Year 0 -$15,631 4,407 8,484 13,807 9,896 Whichever project you choose, if any, you require a 6 percent return on your investment. Required (a) What is the payback period for Project A? | (Click to select): (b) What is the payback period for Project B? (Click to select) (c) What is the discounted payback period for Project A? (Click to select)+ (d) What is the discounted payback period for Project B? (Click to select (e) What is the NPV for Project A? (Click to select)+ (f) What is the NPV for Project B? (Click to select) (g) What is the IRR for Project A? (Click to select) (h) What is the IRR for Project B? (Click to select) (i) What is the profitability index for Project A? (Click to select) i) What is the profitability index for Project B? (Click to select)Explanation / Answer
Project A:
Payback = 3.24 years
discounted payback = 3.35 years
NPV = 199,652.58
PI = 1.85
IRR = 27.00%
Project B
Payback = 2.20 years
discounted payback = 2.34 years
NPV = 15,508.46
PI = 1.99
IRR = 38.00%
Choose A since it has a higher NPV
Discount rate 6.0000% Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow (236,176.00) 0 (236,176.00) (236,176.00) 27,300.000 1 25,754.72 (210,421.28) 58,000.000 2 51,619.79 (158,801.49) 59,000.000 3 49,537.54 (109,263.95) 390,000.000 4 308,916.53 199,652.58Related Questions
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