7. A firm with a 14% cost of capital is evaluating two projects for this year's capital budget. After tax cash flows, including depreciation, are as follows: -P30,000 10,000 35,000 10,000 10,000 Project M Project J -P90,000 35,000 35,000 a. Calculate NPV, IRR, payback for each project. b. Assuming the projects are independent, which one(s) would you recommend? c. If the projects are mutually exclusive, which would you recommend?
7. A firm with a 14% cost of capital is evaluating two projects for this year's capital budget. After tax cash flows, including depreciation, are as follows: -P30,000 10,000 35,000 10,000 10,000 Project M Project J -P90,000 35,000 35,000 a. Calculate NPV, IRR, payback for each project. b. Assuming the projects are independent, which one(s) would you recommend? c. If the projects are mutually exclusive, which would you recommend?
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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![7. A firm with a 14% cost of capital is evaluating two projects for this year's capital
budget. After tax cash flows, including depreciation, are as follows:
1
2
3
10,000
Project M
Project J
-P30,000
-P90,000
10,000
35,000
10,000
35,000
35,000
a. Calculate NPV, IRR, payback for each project.
b. Assuming the projects are independent, which one(s) would you
recommend?
c. If the projects are mutually exclusive, which would you recommend?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F022a0b1d-1427-4ec5-b751-1d217943bb7e%2Fcdc5138e-7de8-48c4-9e4a-7231b172d2ec%2Feo1thp_processed.png&w=3840&q=75)
Transcribed Image Text:7. A firm with a 14% cost of capital is evaluating two projects for this year's capital
budget. After tax cash flows, including depreciation, are as follows:
1
2
3
10,000
Project M
Project J
-P30,000
-P90,000
10,000
35,000
10,000
35,000
35,000
a. Calculate NPV, IRR, payback for each project.
b. Assuming the projects are independent, which one(s) would you
recommend?
c. If the projects are mutually exclusive, which would you recommend?
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