Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$237,041 –$15,140 1 27,400 4,688 2 53,000...

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Finance

Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 –$237,041        –$15,140
1 27,400        4,688
2 53,000        8,324
3 52,000        13,986
4 409,000        8,403

Whichever project you choose, if any, you require a 6 percentreturn on your investment.
Required:
(a) What is the payback period for Project A?
(Click to select)3.42 years3.09 years3.16 years3.26 years3.35years

(b) What is the payback period for Project B?
(Click to select)2.15 years2.26 years2.09 years2.04 years2.22years

(c) What is the discounted payback period for Project A?
(Click to select)3.47 years3.2 years3.54 years3.37 years3.27years

(d) What is the discounted payback period for Project B?
(Click to select)2.21 years2.35 years2.28 years2.17 years2.4years

(e) What is the NPV for Project A?
(Click toselect)$213,784.6$203,604.38$209,712.51$197,496.25$193,424.16

(f) What is the NPV for Project B ?
(Click toselect)$14,335.36$14,637.15$15,089.85$15,542.55$15,844.34

(g) What is the IRR for Project A?
(Click to select)25.65%27.81%26.19%28.35%27%
(h) What is the IRR for Project B?
(Click to select)40.17%37.83%39%37.05%40.95%

(i) What is the profitability index for Project A?
(Click to select)1.7661.8591.9521.8031.915

(j) What is the profitability index for Project B?

Answer & Explanation Solved by verified expert

3.9 Ratings (736 Votes)

a year cash flow Cumulative cash flow 0 237041 237041 1 27400 23704127400 209641 2 53000 20964153000 156641 3 52000 15664152000 104641 4 409000 104641409000 304359 Payback period for A period up to which cumulative cash flow is negative cumulative cash flow See Answer

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Consider the following two mutually exclusive projects: YearCash Flow (A)Cash Flow (B)0–$237,041 –$15,140 127,400 4,688 253,000 8,324 352,000 13,986 4409,000 8,403 Whichever project you choose, if any, you require a 6 percentreturn on your investment.Required:(a)What is the payback period for Project A?(Click to select)3.42 years3.09 years3.16 years3.26 years3.35years (b)What is the payback period for Project B?(Click to select)2.15 years2.26 years2.09 years2.04 years2.22years(c)What is the discounted payback period for Project A?(Click to select)3.47 years3.2 years3.54 years3.37 years3.27years(d)What is the discounted payback period for Project B?(Click to select)2.21 years2.35 years2.28 years2.17 years2.4years(e)What is the NPV for Project A?(Click toselect)$213,784.6$203,604.38$209,712.51$197,496.25$193,424.16(f)What is the NPV for Project B ?(Click toselect)$14,335.36$14,637.15$15,089.85$15,542.55$15,844.34 (g)What is the IRR for Project A?(Click to select)25.65%27.81%26.19%28.35%27%(h)What is the IRR for Project B?(Click to select)40.17%37.83%39%37.05%40.95%(i)What is the profitability index for Project A?(Click to select)1.7661.8591.9521.8031.915(j)What is the profitability index for Project B?

Year	Cash Flow (A)	Cash Flow (B)
0	–$237,041	–$15,140
1	27,400	4,688
2	53,000	8,324
3	52,000	13,986
4	409,000	8,403

(a)	What is the payback period for Project A?

	(Click to select)3.42 years3.09 years3.16 years3.26 years3.35years

(b)	What is the payback period for Project B?

	(Click to select)2.15 years2.26 years2.09 years2.04 years2.22years

(c)	What is the discounted payback period for Project A?

	(Click to select)3.47 years3.2 years3.54 years3.37 years3.27years

(d)	What is the discounted payback period for Project B?

	(Click to select)2.21 years2.35 years2.28 years2.17 years2.4years

(e)	What is the NPV for Project A?

	(Click toselect)$213,784.6$203,604.38$209,712.51$197,496.25$193,424.16

(f)	What is the NPV for Project B ?

	(Click toselect)$14,335.36$14,637.15$15,089.85$15,542.55$15,844.34

(g)	What is the IRR for Project A?

	(Click to select)25.65%27.81%26.19%28.35%27%

(h)	What is the IRR for Project B?

	(Click to select)40.17%37.83%39%37.05%40.95%

(i)	What is the profitability index for Project A?

	(Click to select)1.7661.8591.9521.8031.915