1. The following net cash flows are projected for two separate projects. Your required rate of return is 12%. Year Project A Project B 0 ($150,000) ($400,000) 1 $30,000 $100,000 2 $30,000 $100,000 3 $30,000 $100,000 4 $30,000 $100,000 5 $30,000 $100,000 6 $30,000 $100,000 a. Calculate the payback period for each project. b. Calculate the NPV of each project. c. Calculate the MIRR of each project. d. Which project(s) would you accept and why?
1. The following net cash flows are projected for two separate projects. Your required rate of return is 12%. Year Project A Project B 0 ($150,000) ($400,000) 1 $30,000 $100,000 2 $30,000 $100,000 3 $30,000 $100,000 4 $30,000 $100,000 5 $30,000 $100,000 6 $30,000 $100,000 a. Calculate the payback period for each project. b. Calculate the NPV of each project. c. Calculate the MIRR of each project. d. Which project(s) would you accept and 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
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Transcribed Image Text:1. The following net cash flows are projected for two separate projects. Your required rate of return is
12%.
Year Project A Project B
0 ($150,000) ($400,000)
1 $30,000 $100,000
2 $30,000 $100,000
3 $30,000 $100,000
4 $30,000 $100,000
5 $30,000 $100,000
6 $30,000 $100,000
a. Calculate the payback period for each project.
b. Calculate the NPV of each project.
c. Calculate the MIRR of each project.
d. Which project(s) would you accept and why?
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