Capital Budgeting Methods Project S has a cost of $11,000 and is expected to produce benefits (cash flows) of $3,400 per year for 5 years. Project L costs $23,000 and is expected to produce cash flows of $6,900 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $   Project L: $   Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, Project S/Project L would be selected.   Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places. Project S:   % Project L:   % Which project would be selected, assuming they are mutually exclusive? Based on the IRR values, Project S/Project L would be selected. Calculate the two projects' MIRRs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to two decimal places. Project S:   % Project L:   % Which project would be selected, assuming they are mutually exclusive? Based on the MIRR values, -Select-Project S/Project L would be selected.   Calculate the two projects' PIs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to three decimal places. Project S:  Project L:  Which project would be selected, assuming they are mutually exclusive? Based on the NPV values, Project S/Project L would be selected.   Which project should actually be selected? Project S/Project L should actually be selected.

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
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Capital Budgeting Methods

Project S has a cost of $11,000 and is expected to produce benefits (cash flows) of $3,400 per year for 5 years. Project L costs $23,000 and is expected to produce cash flows of $6,900 per year for 5 years.

Calculate the two projects' NPVs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to the nearest cent.

Project S: $  

Project L: $  

Which project would be selected, assuming they are mutually exclusive?

Based on the NPV values, Project S/Project L would be selected.

 

Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places.

Project S:   %

Project L:   %

Which project would be selected, assuming they are mutually exclusive?

Based on the IRR values, Project S/Project L would be selected.

Calculate the two projects' MIRRs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to two decimal places.

Project S:   %

Project L:   %

Which project would be selected, assuming they are mutually exclusive?

Based on the MIRR values, -Select-Project S/Project L would be selected.

 

Calculate the two projects' PIs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to three decimal places.

Project S: 

Project L: 

Which project would be selected, assuming they are mutually exclusive?

Based on the NPV values, Project S/Project L would be selected.

 

Which project should actually be selected?

Project S/Project L should actually be selected.
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