NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 9%, has estimated its cash flows as shown in the following table: a. Calculate the NPV of each project, and assess its acceptability. b. Calculate the IRR for each project, and assess its acceptability. Data table (Click on the icon here in order to copy the contents of the data table below - X into a spreadsheet.) a. The NPV of project A is $ (Round to the nearest cent.) Initial investment (CF) Project A $120,000 Project B $102,000 Year (t) Cash inflows (CF) 1 $25,000 $60,000 2 $30,000 $35,000 3 $30,000 $25,000 4 $55,000 $25,000 5 $55,000 $10,000
NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 9%, has estimated its cash flows as shown in the following table: a. Calculate the NPV of each project, and assess its acceptability. b. Calculate the IRR for each project, and assess its acceptability. Data table (Click on the icon here in order to copy the contents of the data table below - X into a spreadsheet.) a. The NPV of project A is $ (Round to the nearest cent.) Initial investment (CF) Project A $120,000 Project B $102,000 Year (t) Cash inflows (CF) 1 $25,000 $60,000 2 $30,000 $35,000 3 $30,000 $25,000 4 $55,000 $25,000 5 $55,000 $10,000
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
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Transcribed Image Text:NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 9%, has estimated its cash
flows as shown in the following table:
a. Calculate the NPV of each project, and assess its acceptability.
b. Calculate the IRR for each project, and assess its acceptability.
Data table
(Click on the icon here in order to copy the contents of the data table below
- X
into a spreadsheet.)
a. The NPV of project A is $
(Round to the nearest cent.)
Initial investment
(CF)
Project A
$120,000
Project B
$102,000
Year (t)
Cash inflows (CF)
1
$25,000
$60,000
2
$30,000
$35,000
3
$30,000
$25,000
4
$55,000
$25,000
5
$55,000
$10,000
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