c) The net cash flow for two projects, Coffee Shop and Hair Salon, are as follows: Year Coffee Shop Hair Salon 0 -$10 000 -$5 000 1 2 3 4 -$3000 $4,000 $6,000 $8,000 -$2000 $1,000 $3,000 $5,000 (i) Use the net present value criterion to decide which business project is the most profitable if the market interest rate is 6%. Explain your answer and show all your calculations. (Give your answer to 2 decimal places.) (ii) Estimate the IRR of the Hair Salon project and decide whether this project would proceed? Explain your answer and show all your calculations. (Give your answer to 1 decimal place.)

c) The net cash flow for two projects, Coffee Shop and Hair Salon, are as follows: Year Coffee Shop Hair Salon 0 -$10 000 -$5 000 1 2 3 4 -$3000 $4,000 $6,000 $8,000 -$2000 $1,000 $3,000 $5,000 (i) Use the net present value criterion to decide which business project is the most profitable if the market interest rate is 6%. Explain your answer and show all your calculations. (Give your answer to 2 decimal places.) (ii) Estimate the IRR of the Hair Salon project and decide whether this project would proceed? Explain your answer and show all your calculations. (Give your answer to 1 decimal place.)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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