Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Consider the following two mutually exclusive projects:
Cash Flow (A)
Cash Flow (B)
-$ 215,000
34,000
-$ 57,000
32,900
45,000
24,300
18,300
51,000
270,000
17,800
The required return on these investments is 13 percent.
a. What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. What is the NPV for each project?
Year
0
WNIO
1
2
3
4
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
c. What is the IRR for each project?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
d. What is the profitability index for each project?
Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.
e. Based on your answers in (a) through (d), which project will you finally choose?
a. Project A
Project B
b. Project A
Project B
c. Project A
Project B
d. Project A
Project B
years
years
%
%
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