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Tesar Chemicals is considering Projects S and L, whose cash flows are shown below. These...

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Finance

Tesar Chemicals is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable.

WACC: 7%

Year 0 1 2 3 4

CFS -$100 $50 $40 $30 $10

CFL -$200 $30 $50 $60 $100

a.Find NPV, IRR and discounted payback period for Project S.

b.Find NPV, IRR and discounted payback period for Project L.

c.If Projects S and L are mutually exclusive, which project should be selected? Explain why you choose the project.

d.If Projects S and L are independent, which project should be selected? Explain why you choose the project.

e.Find crossover rate.

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