Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 â$429,000 â$42,000 1 42,000 20,800 2 64,000 12,900 3 81,000 20,600 4 544,000 17,400 The required return on these investments is 11 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. 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. 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. Enter your answers as a percentage 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. 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?
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 â$429,000 â$42,000 1 42,000 20,800 2 64,000 12,900 3 81,000 20,600 4 544,000 17,400 The required return on these investments is 11 percent. Required: (a) What is the payback period for each project? (Do not round intermediate calculations. 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. 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. Enter your answers as a percentage 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. 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?
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?
| Consider the following two mutually exclusive projects: |
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | â$428,000 | â$41,500 |
| 1 | 42,500 | 20,700 |
| 2 | 63,500 | 13,000 |
| 3 | 80,500 | 20,100 |
| 4 | 543,000 | 16,900 |
| The required return on these investments is 14 percent. |
| Required: | |
| (a) | What is the payback period for each project? (Do not round intermediate calculations. 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. 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. Enter your answers as a percentage 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. 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? |
