Muffins co. is considering to modernize its production facilities and it has two proposals under consideration. The expected cash flows associated with these projects is as follows. The discount rate associated with both the projects is 12%. Years Proposal 1- $ Proposal 2- $ 0 (40,000) (64000) 1 18000 10000 2 24000 32000 3 32000 19000 4 11000 25000 Required: Calculate IRR for proposal 2 Calculate IRR for proposal 1 Calculate profitability index for proposal 2 Calculate payback for proposal 2 Calculate payback for proposal 1
Muffins co. is considering to modernize its production facilities and it has two proposals under consideration. The expected cash flows associated with these projects is as follows. The discount rate associated with both the projects is 12%. Years Proposal 1- $ Proposal 2- $ 0 (40,000) (64000) 1 18000 10000 2 24000 32000 3 32000 19000 4 11000 25000 Required: Calculate IRR for proposal 2 Calculate IRR for proposal 1 Calculate profitability index for proposal 2 Calculate payback for proposal 2 Calculate payback for proposal 1
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 11PA: Gallant Sports s considering the purchase of a new rock-climbing facility. The company estimates...
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Muffins co. is considering to modernize its production facilities and it has two proposals under consideration. The expected cash flows associated with these projects is as follows. The discount rate associated with both the projects is 12%.
Years |
Proposal 1- $ |
Proposal 2- $ |
0 |
(40,000) |
(64000) |
1 |
18000 |
10000 |
2 |
24000 |
32000 |
3 |
32000 |
19000 |
4 |
11000 |
25000 |
Required:
Calculate IRR for proposal 2
Calculate IRR for proposal 1
Calculate profitability index for proposal 2
Calculate payback for proposal 2
Calculate payback for proposal 1
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