For the following projects, compute NVP, IRR, MIRR, profitability index and payback. If these projects are mutually exclusive, which one(s) should be done? If they are independent, which one(s) should be undertaken? Project A Project B Project C Project D -1000 -1500 -500 -2000 400 500 100 600 400 500 300 800 400 700 250 200 400 200 200 300
For the following projects, compute NVP, IRR, MIRR, profitability index and payback. If these projects are mutually exclusive, which one(s) should be done? If they are independent, which one(s) should be undertaken? Project A Project B Project C Project D -1000 -1500 -500 -2000 400 500 100 600 400 500 300 800 400 700 250 200 400 200 200 300
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A and B are mutually exclusive projects. The required rate of return is 10%.
The cutoff period is 2 years.
| Year | Project A | Project B |
| 0 | -$1,000 | -$1,000 |
| 1 | 500 | 100 |
| 2 | 400 | 300 |
| 3 | 300 | 400 |
| 4 | 100 | 675 |
If the company applies payback period decision, which project should be recommended?
a Project A because it has payback of 2.33 years.
b. Project A because it has payback of 2.107 years.
c. Project B because it has payback of 2.33 years.
d. Project B because it has payback of 3.30 years.
e. Neither of two projects is recommended.
Company A has the opportunity to do any, none, or all of the projects for which the net cash flows per year are shown below. Projects A and C can be done together. Projects B and C can be done together. But Projects A and B are mutually exclusive. The company has a cost of capital of 18%. Which should the company do and why? You must use at least two capital budgeting methods. Show your work.
| A | B | C | |
| 0 | -500 | -500 | -600 |
| 1 | 200 | -200 | 100 |
| 2 | 200 | 600 | 100 |
| 3 | 200 | 400 | 100 |
| 4 | 200 | 200 | 100 |
| 5 | 200 | -300 | 100 |
| 6 | 200 | 100 | |
| 7 | -300 | 100 |
