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Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​ projects, that both cost ​$170,000. The​ company's board of directors has set a​ 4-year payback requirement the cost of capital is 11​%. The project cash flows are shown in the following​ table attached. a. Calculate the payback period for each project. Rank the projects by payback period. b.  Calculate the NPV of each project. Rank the project by NPV. c.  Calculate the IRR of each project. Rank the project by IRR.

Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​ projects, that both cost ​$170,000. The​ company's board of directors has set a​ 4-year payback requirement the cost of capital is 11​%. The project cash flows are shown in the following​ table attached. a. Calculate the payback period for each project. Rank the projects by payback period. b.  Calculate the NPV of each project. Rank the project by NPV. c.  Calculate the IRR of each project. Rank the project by IRR.

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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 Nicholson Roofing​ Materials, Inc., is considering two mutually exclusive​ projects, that both cost ​$170,000. The​ company's board of directors has set a​ 4-year payback requirement the cost of capital is 11​%. The project cash flows are shown in the following​ table attached.

a. Calculate the payback period for each project. Rank the projects by payback period.
b.  Calculate the NPV of each project. Rank the project by NPV.
c.  Calculate the IRR of each project. Rank the project by IRR.
d.  Make a recommendation.
(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Cash flows (CF) Year Project A Project B 1 $50,000 $75,000 $50,000 $70,000 $30,000 3 $50,000 4 $50,000 $50,000 $30,000 $30,000 $50,000 $30,000 Print Done ancial calculator Get more help - Media - Clear all ma ive Answers In as jast as 30 minutes
Transcribed Image Text:(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Cash flows (CF) Year Project A Project B 1 $50,000 $75,000 $50,000 $70,000 $30,000 3 $50,000 4 $50,000 $50,000 $30,000 $30,000 $50,000 $30,000 Print Done ancial calculator Get more help - Media - Clear all ma ive Answers In as jast as 30 minutes
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