Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$307,897 –$16,209 1 27,800 5,947 2 57,000...

80.2K

Verified Solution

Question

Finance

Consider the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 –$307,897        –$16,209
1 27,800        5,947
2 57,000        8,031
3 55,000        13,892
4 407,000        8,690

Whichever project you choose, if any, you require a 6 percentreturn on your investment.
a. What is the payback period for ProjectA?

b. What is the payback period for ProjectB?
c. What is the discounted payback period forProject A?
d. What is the discounted payback period forProject B?
e. What is the NPV for Project A?
f. What is the NPV for Project B ?

g. What is the IRR for Project A?
h. What is the IRR for Project B?
i. What is the profitability index for ProjectA?
j. What is the profitability index for ProjectB?

Answer & Explanation Solved by verified expert

4.2 Ratings (670 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Consider the following two mutually exclusive projects: YearCash Flow (A)Cash Flow (B)0–$307,897 –$16,209 127,800 5,947 257,000 8,031 355,000 13,892 4407,000 8,690 Whichever project you choose, if any, you require a 6 percentreturn on your investment.a. What is the payback period for ProjectA? b. What is the payback period for ProjectB?c. What is the discounted payback period forProject A?d. What is the discounted payback period forProject B?e. What is the NPV for Project A?f. What is the NPV for Project B ? g. What is the IRR for Project A?h. What is the IRR for Project B?i. What is the profitability index for ProjectA?j. What is the profitability index for ProjectB?

Year	Cash Flow (A)	Cash Flow (B)
0	–$307,897	–$16,209
1	27,800	5,947
2	57,000	8,031
3	55,000	13,892
4	407,000	8,690