FIN 325 Ch. 8 Practice Exercise Your firm is evaluating 4 projects (A-D) with...
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Accounting
FIN 325 Ch. 8 Practice Exercise
Your firm is evaluating 4 projects (A-D) with the following estimated CFs. The required return for all projects is 10%.
| Year | CF(A) | CF(B) | CF(C) | CF(D) |
| 0 | -1000 | -1200 | -2000 | -4000 |
| 1 | 200 | 0 | 350 | 500 |
| 2 | 400 | 300 | 750 | 1000 |
| 3 | 600 | 600 | 1150 | 2000 |
| 4 | 800 | 900 | 1500 | 3000 |
| 5 | 0 | 1000 | 0 | 0 |
1. Find the NPV, IRR, Payback Period, and Profitability Index for all 4 projects?
2. If the projects are mutually exclusive and only one can be selected, which should the firm choose?
3. A the firm is free to choose any combination of projects, but has a budget limit of $4000, which combo should they choose?
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