Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$ 418,000 −$ 36,500 1 47,500 19,700 2 58,500 14,000 3 75,500 15,100 4 533,000 11,900 The required return on these investments is 14 percent. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. Based on your answers in (a) through (d), which project will you finally choose?
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 −$ 418,000 −$ 36,500 1 47,500 19,700 2 58,500 14,000 3 75,500 15,100 4 533,000 11,900 The required return on these investments is 14 percent. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. Based on your answers in (a) through (d), which project will you finally choose?
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
Problem 1PS
Related questions
Question
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) |
|---|---|---|
| 0 | −$ 418,000 | −$ 36,500 |
| 1 | 47,500 | 19,700 |
| 2 | 58,500 | 14,000 |
| 3 | 75,500 | 15,100 |
| 4 | 533,000 | 11,900 |
The required return on these investments is 14 percent.
-
What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
-
What is the NPV for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
-
What is the IRR for each project?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
-
What is the profitability index for each project?
Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.
-
Based on your answers in (a) through (d), which project will you finally choose?
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