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  3. you are considering the following mutually exclusi

You are considering the following mutually exclusive projects. Both projects will be depreciated using straight line...

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Accounting

You are considering the following mutually exclusive projects.Both projects will be depreciated using straight line depreciationto a zero book value over the life of the project. Neither projecthas any salvage value.

YearProject AYearProject B
0$ - 75,0000$-70,000
119,000110,000
248,000216,000
312,000372,000
Required Rate of Return10%13%
Required Payback Period2 years2 years
Required Accounting Return8%11%

1. Based on the net present value method of analysis, whichproject should you accept? Provide Proof.

2. Based on the on the internal rate of return analysis, whichproject should you accept? Provide Proof.

Answer & Explanation Solved by verified expert
4.0 Ratings (599 Votes)
Answer 1 Calculation of net present value of both project using required rate of return as discount rate Project A Project B Year Discount factor 10 Cash flow Present value Year    See Answer
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