Bagel Pantry Inc. is considering two mutually exclusive projects with widely differing lives. The company's cost...

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Finance

Bagel Pantry Inc. is considering two mutually exclusiveprojects with widely differing lives. The company's cost of capitalis 12%. The project cash flows are summarized as follows:
                        ProjectA          ProjectB
   C₀($25,000)        ($23,000)
   C₁$14,742         $ 6,641
   C₂$14,742         $ 6,641
   C₃$14,742         $ 6,641
   C₄$6,641
   C₅$6,641
   C₆$6,641
   C₇$6,641
   C₈$6,641
   C₉$6,641
Compare the projects by using Payback.
Compare the projects by using NPV.
Compare the projects by using IRR.
Compare the projects by using the replacement chainapproach.
Compare the projects by using the EAA method.
Chose a project and justify your choice.

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4.0 Ratings (418 Votes)

1 Payback Method Payback Period Initial Investment Net annual cashflows For Project A Intial Investment 25000 Net annual cashflows 14742 Payback Period Project A 2500014742 1695 Years For Project B Intial Investment 23000 Net annual cashflows 6641 Payback Period Project B 230006641 3463 See Answer

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Bagel Pantry Inc. is considering two mutually exclusiveprojects with widely differing lives. The company's cost of capitalis 12%. The project cash flows are summarized as follows: ProjectA ProjectB C0 ($25,000) ($23,000) C1 $14,742 $ 6,641 C2 $14,742 $ 6,641 C3 $14,742 $ 6,641 C4 $6,641 C5 $6,641 C6 $6,641 C7 $6,641 C8 $6,641 C9 $6,641Compare the projects by using Payback.Compare the projects by using NPV.Compare the projects by using IRR.Compare the projects by using the replacement chainapproach.Compare the projects by using the EAA method.Chose a project and justify your choice.