Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$289,995 –$26,062 1...

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Finance

Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 –$289,995 –$26,062
1 27,700 10,832
2 58,000 9,008
3 51,000 8,800
4 419,000 8,595
Whichever project you choose, if any, you require a 15 percentreturn on your investment. Required:
(a) The payback period for Projects A and B is and years, respectively. (Round your answers to 2 decimal places.(e.g., 32.16))
(b) The discounted payback period for Projects A and B is and years, respectively. (Round your answers to 2 decimalplaces. (e.g., 32.16))
(c) The NPV for Projects A and B is $ and $ ,respectively. (Do not include the dollar sign ($). Round youranswers to 2 decimal places, (e.g., 32.16))
(d) The IRR for Projects A and B is percent and percent,respectively. (Do not include the percent sign (%). Round youranswers to 2 decimal places. (e.g., 32.16))
(e) The profitability index for Projects A and B is andand___ , respectively. (Round your answers to 3 decimalplaces. (e.g., 32.161))

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3.7 Ratings (621 Votes)

a Payback period for Project A is 3 289995 136700419000 3 03659 33659 337 rounded off to two decimal places Payback period for project B is 2 62208595 2 07239 27239 272 rounded off to two decimal places b Discounted See Answer

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Transcribed Image Text

Consider the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 –$289,995 –$26,0621 27,700 10,8322 58,000 9,0083 51,000 8,8004 419,000 8,595Whichever project you choose, if any, you require a 15 percentreturn on your investment. Required:(a) The payback period for Projects A and B is ____ and ____years, respectively. (Round your answers to 2 decimal places.(e.g., 32.16))(b) The discounted payback period for Projects A and B is ____and ____years, respectively. (Round your answers to 2 decimalplaces. (e.g., 32.16))(c) The NPV for Projects A and B is____ $ and ____$ ,respectively. (Do not include the dollar sign ($). Round youranswers to 2 decimal places, (e.g., 32.16))(d) The IRR for Projects A and B is____ percent and ____percent,respectively. (Do not include the percent sign (%). Round youranswers to 2 decimal places. (e.g., 32.16))(e) The profitability index for Projects A and B is and______and_____ , respectively. (Round your answers to 3 decimalplaces. (e.g., 32.161))