Calculate the following for each of the projects. I Net present value II. Profitability Index III Internal Rate of Return and

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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a. Calculate the following for each of the projects.
I Net present value
II. Profitability Index
III Internal Rate of Return and
IV. Accounting Rate of Return for each project.
V. payback period
VI. Discounted payback period
PROJECTS
A
B
Initial Cost
Expected life
Scrap value expected
Expected cash inflows
S200,000
5 years
$10,000
$230,000
5 years
$15,000
End year
1
80 000
100 000
70 000
70 000
3
65 000
50 000
4
60 000
50 000
55 000
50 000
Cost of capital is 15%, the base rate prevailing is 10%
Transcribed Image Text:a. Calculate the following for each of the projects. I Net present value II. Profitability Index III Internal Rate of Return and IV. Accounting Rate of Return for each project. V. payback period VI. Discounted payback period PROJECTS A B Initial Cost Expected life Scrap value expected Expected cash inflows S200,000 5 years $10,000 $230,000 5 years $15,000 End year 1 80 000 100 000 70 000 70 000 3 65 000 50 000 4 60 000 50 000 55 000 50 000 Cost of capital is 15%, the base rate prevailing is 10%
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