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Charlestown Inc. is considering Projects S and L, whose cash flows are shown below. These projects...

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Question

Finance

Charlestown Inc. is considering Projects S and L, whose cashflows are shown below. These projects are mutually exclusive,equally risky, and not repeatable.

WACC:

9.00%

0

1

2

3

4

CFS

-$2,000

$950

$950

$950

$950

CFL

-$9,000

$3,200

$3,200

$3,200

$3,200

  1. If the decision is made by choosing the project with the higherIRR, how much value will be forgone?
  2. What is the payback period for Project S?
  3. What is the discounted payback period for Project L?
  4. What is the cross-over rate?
  5. What is MIRR for project S?

Answer & Explanation Solved by verified expert
4.1 Ratings (613 Votes)
The IRR of each project is calculated using IRR function inExcelThe NPV of each project is calculated using NPV function inExcel with 9 discount    See Answer
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