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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 $. (Round to the nearest cent.) The NPV of project B is $ (Round to the nearest cent.) c. The IRR of project A is%. (Round to two decimal places.) The IRR of project B is%. (Round to two decimal places.) d. Which project will you recommend? (Select the best answer below.) A. Project B B. Project A

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 $. (Round to the nearest cent.) The NPV of project B is $ (Round to the nearest cent.) c. The IRR of project A is%. (Round to two decimal places.) The IRR of project B is%. (Round to two decimal places.) d. Which project will you recommend? (Select the best answer below.) A. Project B B. Project A

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 12%. 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. GICKER 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 $. (Round to the nearest cent.) The NPV of project B is $. (Round to the nearest cent.) c. The IRR of project A is%. (Round to two decimal places.) The IRR of project B is%. (Round to two decimal places.) d. Which project will you recommend? (Select the best answer below.) OA. Project B OB. Project A
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 12%. 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. GICKER 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 $. (Round to the nearest cent.) The NPV of project B is $. (Round to the nearest cent.) c. The IRR of project A is%. (Round to two decimal places.) The IRR of project B is%. (Round to two decimal places.) d. Which project will you recommend? (Select the best answer below.) OA. Project B OB. Project A
All techniques with NPV profile-Mutually exclusive projects Projects A and B of X Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment (CFO) Year (1) 1 OB. Project A 2345 Print Project A 00,000 Cash inflows (CF₂) $50,000 $55,000 $60,000 $65,000 $70,000 Project B $160,000 Done $50,000 $50,000 $50,000 $50,000 $50,000 -
Transcribed Image Text:All techniques with NPV profile-Mutually exclusive projects Projects A and B of X Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment (CFO) Year (1) 1 OB. Project A 2345 Print Project A 00,000 Cash inflows (CF₂) $50,000 $55,000 $60,000 $65,000 $70,000 Project B $160,000 Done $50,000 $50,000 $50,000 $50,000 $50,000 -
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