Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table Cash flows Project A Project B Project C Initial investment (CF0) $60,000 $100,000 $110,000 Cash inflows (CFt), t = 1 to 5 $20,000 $ 31,500 $ 32,500 e. Calculate the internal rate of return (IRR) for each project. f. Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why.
Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table Cash flows Project A Project B Project C Initial investment (CF0) $60,000 $100,000 $110,000 Cash inflows (CFt), t = 1 to 5 $20,000 $ 31,500 $ 32,500 e. Calculate the internal rate of return (IRR) for each project. f. Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax
Cash flows Project A Project B Project C
Initial investment (CF0) $60,000 $100,000 $110,000
Cash inflows (CFt), t = 1 to 5 $20,000 $ 31,500 $ 32,500
e. Calculate the
f. Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why.
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