A company is evaluating the following independent projects. The cash flows are as follows:YearProject XProject...
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Accounting
A company is evaluating the following independent projects. The cash flows are as follows:
Year | Project X | Project Y | Project Z |
Initial Outlay | -$10,000 | -$12,000 | -$8,000 |
Year 1 | $2,000 | $4,000 | $3,000 |
Year 2 | $4,000 | $4,000 | $3,000 |
Year 3 | $6,000 | $4,000 | $3,000 |
Required:
- Calculate the payback period for each project.
- Determine the accounting rate of return for each project.
- If the company’s cost of capital is 10%, compute the NPV for each project.
- Find the profitability index for each project.
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