You are considering two mutually exclusive projects with the following cash flows. The appropriate cost of capital for Project A is 10%. The appropriate cost of capital for Project B is 14%. Find the Profitability Index and Payback Period of each project. Make sure to show your work.
Year 0
Year 1
Year 2
Year 3
Project A
-$1,000
$500
$600
$700
Project B
-$10
$10
$20
$30
You are considering two mutually exclusive projects with the following cash flows. The appropriate cost of capital for Project A is 10%. The appropriate cost of capital for Project B is 14%. Find the Profitability Index and Payback Period of each project. Make sure to show your work.
| Year 0 | Year 1 | Year 2 | Year 3 | |
| Project A | -$1,000 | $500 | $600 | $700 |
| Project B | -$10 | $10 | $20 | $30 |
Related questions
Your division is considering two investment projects, each of which requires an up-front expenditure of $24 million. You estimate that the cost of capital is 9% and that the investments will produce the following after-tax cash flows (in millions of dollars):
(10 points)
| Year | Project A | Project B |
| 1 | 5 | 20 |
| 2 | 10 | 10 |
| 3 | 15 | 8 |
| 4 | 20 | 6 |
What is the regular payback period for each of the projects? Round your answers to two decimal places.
Project A years
Project B years
What is the discounted payback period for each of the projects? Round your answers to two decimal places.
Project A years
Project B years
If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake?
If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake?
If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake?
What is the crossover rate? Round your answer to two decimal places.
%
If the cost of capital is 10%, what is the modified IRR (MIRR) of each project? Round your answers to two decimal places.
Project A %
Project B %
