TNPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 15%. The cash flows for each project are shown in the following table a. Calculate each project's payback period b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project d. Indicate which project you would recommend 4 a. The payback period of project A is years. (Round to two decimal places.) The payback period of project B is years (Round to two decimal places.) b. The NPV of project A is $ The NPV of project B is $ (Round to the nearest cent.) c. The IRR of project A is 15.92 %. (Round to two decimal places.) The IRR of project B is 15.24% (Round to two decimal places.) (Round to the nearest cent.)
TNPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 15%. The cash flows for each project are shown in the following table a. Calculate each project's payback period b. Calculate the net present value (NPV) for each project. c. Calculate the internal rate of return (IRR) for each project d. Indicate which project you would recommend 4 a. The payback period of project A is years. (Round to two decimal places.) The payback period of project B is years (Round to two decimal places.) b. The NPV of project A is $ The NPV of project B is $ (Round to the nearest cent.) c. The IRR of project A is 15.92 %. (Round to two decimal places.) The IRR of project B is 15.24% (Round to two decimal places.) (Round to the nearest cent.)
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 15P
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Transcribed Image Text:All techniques with NPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 15%. The cash flows for each project are
shown in the following table
a. Calculate each project's payback period.
b. Calculate the net present value (NPV) for each project.
c. Calculate the internal rate of return (IRR) for each project
d. Indicate which project you would recommend
years (Round to two decimal places.)
a. The payback period of project A is
The payback period of project B is
years (Round to two decimal places.)
b. The NPV of project A is $
The NPV of project B is $
c. The IRR of project A is
The IRR of project B is 15.24%
(Round to the nearest cent.)
(Round to the nearest cent.)
15.92%. (Round to two decimal places.)
(Round to two decimal places.)
پہلے
Transcribed Image Text:Data table
(Click on the icon here in order to copy the contents of the data table below
into a spreadsheet.)
Project A
Project B
Initial investment
$130,000
$100,000
(CF)
Year (t)
1
234N
5
Print
Cash inflows (CF₂)
$30,000
$35,000
$40,000
$45,000
$50,000
Done
$30,000
$30,000
$30,000
$30,000
$30,000
X
cost
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