Assume that you are the chief financial officer at Porter MemorialHospital. The CEO has asked to to analyze two proposed capitalinvestments ----Project X and Project Y. Each project requires anet investment outlay of $10,000, and the cost of capital for eachproject is 12%. The projectsâ expected net cash flows are;
Year Project X Project Y
0 ($10,000) ($10,000)
1 6,500 3,000
2 3,000 3,000
3 3,000 3,000
4 1,000 3,000
Question; Calculate each projectâs payback period, net presentvalue, and internal rate of return.
Assume that you are the chief financial officer at Porter MemorialHospital. The CEO has asked to to analyze two proposed capitalinvestments ----Project X and Project Y. Each project requires anet investment outlay of $10,000, and the cost of capital for eachproject is 12%. The projectsâ expected net cash flows are;
Year Project X Project Y
0 ($10,000) ($10,000)
1 6,500 3,000
2 3,000 3,000
3 3,000 3,000
4 1,000 3,000
Question; Calculate each projectâs payback period, net presentvalue, and internal rate of return.
Related questions
You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projectsâ expected net cash flows are shown in the table below.
Expected Net Cash Flows
| Year | Project X | Project Y |
| 0 | â $10,000 | â $10,000 |
| 1 | 6,500 | 3,500 |
| 2 | 3,000 | 3,500 |
| 3 | 3,000 | 3,500 |
| 4 | 1,000 | 3,500 |
Use the Homework Student Workbook to calculate each projectâs net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).
Which project or projects should be accepted if they are independent?
Which project or projects should be accepted if they are mutually exclusive?
You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projectsâ expected net cash flows are shown in the table below.
Expected Net Cash Flows
| Year | Project X | Project Y |
| 0 | â $10,000 | â $10,000 |
| 1 | 6,500 | 3,500 |
| 2 | 3,000 | 3,500 |
| 3 | 3,000 | 3,500 |
| 4 | 1,000 | 3,500 |
Use the Homework Student Workbook to calculate each projectâs net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).
Which project or projects should be accepted if they are independent?
Which project or projects should be accepted if they are mutually exclusive?
You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B. Each project has a cost of $50,000, and the cost of capital for each is 10%.
The projects’ expected net cash flows are as follows:
|
|
Expected Net Cash Flows |
|
|
Year |
Project A |
Project B |
|
0 |
($50,000) |
($50,000) |
|
1 |
25,000 |
15,000 |
|
2 |
20,000 |
15,000 |
|
3 |
10,000 |
15,000 |
|
4 |
5,000 |
15,000 |
|
5 |
5,000 |
15,000 |
- Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).
