George Company is evaluating two mutually exclusive projects with 3-year lives. Each project requires an investment of P50,000. The projects have the following "net returns" at the end of each year. Project 2 Project 1 P10,000 Year 1 P30,000 20,000 20,000 3 30,000 10,000 REQUIRED: 1. Determine the discounted or internal rates of return for both projects. Round answers to 3 decimals. 2. Determine the net present value of each project using an 11% discount rate. 3. Determine the profitability index of each project also. Round answers to 2 decimals.
George Company is evaluating two mutually exclusive projects with 3-year lives. Each project requires an investment of P50,000. The projects have the following "net returns" at the end of each year. Project 2 Project 1 P10,000 Year 1 P30,000 20,000 20,000 3 30,000 10,000 REQUIRED: 1. Determine the discounted or internal rates of return for both projects. Round answers to 3 decimals. 2. Determine the net present value of each project using an 11% discount rate. 3. Determine the profitability index of each project also. Round answers to 2 decimals.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please help me numbers 1, 2, and 3, thank you
Transcribed Image Text:George Company is evaluating two mutually exclusive projects with 3-year
lives. Each project requires an investment of P50,000. The projects have the
following "net returns" at the end of each year.
Project 2
P30,000
Project 1
Year 1
P10,000
2
20,000
20,000
3
30,000
10,000
REQUIRED:
1. Determine the discounted or internal rates of return for both projects. Round
answers to 3 decimals.
2. Determine the net present value of each project using an 11% discount rate.
3. Determine the profitability index of each project also. Round answers to 2
decimals.
4. What can you conclude about the effect of timing of the cash flows has upon a
project's IRR and net present value?
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