Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B) 0 �$ 345,000 �$ 48,500 1 50,000 24,500 2 70,000 22,500 3 70,000 20,000 4 445,000 15,100
Whichever project you choose, if any, you require a 14 percent return on your investment.
a-1 What is the payback period for each project? (Round your answers to 2 decimal places. (e.g., 32.16))
Payback period Project A years Project B years
b-1 What is the discounted payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
Discounted payback period Project A years Project B years
c-1 What is the NPV for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)
NPV Project A $ Project B $
d-1 What is the IRR for each project? (Round your answers to 2 decimal places. (e.g., 32.16))
IRR Project A % Project B %
e-1 What is the profitability index for each project? (Do not round intermediate calculations and round your final answers to 3 decimal places. (e.g., 32.161))
Please explain how you calculated each step.
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) | |||||
| 0 | �$ | 345,000 | �$ | 48,500 | |||
| 1 | 50,000 | 24,500 | |||||
| 2 | 70,000 | 22,500 | |||||
| 3 | 70,000 | 20,000 | |||||
| 4 | 445,000 | 15,100 | |||||
| Whichever project you choose, if any, you require a 14 percent return on your investment. |
| a-1 | What is the payback period for each project? (Round your answers to 2 decimal places. (e.g., 32.16)) |
| Payback period | ||
| Project A | years | |
| Project B | years | |
| b-1 | What is the discounted payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
| Discounted payback period | ||
| Project A | years | |
| Project B | years | |
| c-1 | What is the NPV for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16) |
| NPV | ||
| Project A | $ | |
| Project B | $ | |
| d-1 | What is the IRR for each project? (Round your answers to 2 decimal places. (e.g., 32.16)) |
| IRR | ||
| Project A | % | |
| Project B | % | |
| e-1 | What is the profitability index for each project? (Do not round intermediate calculations and round your final answers to 3 decimal places. (e.g., 32.161)) |
Please explain how you calculated each step.
Related questions
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) | ||
| 0 | â$ | 416,000 | â$ | 35,500 |
| 1 | 48,500 | 19,500 | ||
| 2 | 57,500 | 14,200 | ||
| 3 | 74,500 | 14,100 | ||
| 4 | 531,000 | 10,900 | ||
The required return on these investments is 12 percent.
a. 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.)
| Payback period | ||
| Project A | years | |
| Project B | years | |
b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
| Net present value | ||
| Project A | $ | |
| Project B | $ | |
c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
| Internal rate of return | ||
| Project A | $ | |
| Project B | $ | |
d. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)
| Profitability index | ||
| Project A | ||
| Project B | ||
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) | ||
| 0 | â$ | 423,000 | â$ | 39,000 |
| 1 | 45,000 | 20,200 | ||
| 2 | 61,000 | 13,500 | ||
| 3 | 78,000 | 17,600 | ||
| 4 | 538,000 | 14,400 | ||
The required return on these investments is 14 percent.
a. 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.)
| Payback period | ||
| Project A | years | |
| Project B | years | |
b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
| Net present value | ||
| Project A | $ | |
| Project B | $ | |
c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
| Internal rate of return | ||
| Project A | $ | |
| Project B | $ | |
d. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)
| Profitability index | ||
| Project A | ||
| Project B | ||
e. Based on your answers in (a) through (d), which project will you finally choose?
