Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and subsequent cash inflows associated with these projects are shown in the following table attached: a. Calculate the payback period for each project. b. Calcuate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 13%. c. Calculate the internal rate of return (IRR) for each project. d. Indicate which project you would recommend.
Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and subsequent cash inflows associated with these projects are shown in the following table attached: a. Calculate the payback period for each project. b. Calcuate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 13%. c. Calculate the internal rate of return (IRR) for each project. d. Indicate which project you would recommend.
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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Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and subsequent
a. Calculate the payback period for each project.
b. Calcuate the
c. Calculate the
d. Indicate which project you would recommend.
Transcribed Image Text:ally exclusive investments Pound Industries is attempting to select the best of thi
nflows associated with these projects are shown in the following table.
Cash flows
Project A
Project B
Project C
Initial investment (CF)
$60,000
$110,000
$110,000
Cash inflows (CF), t= 1 to 5
$20,000
$32,000
$33,500
each project.
PV) of each project, assuming that the firm has a cost of capital equal to 13%.
rn (IRR) for each project.
ecommend.
years. (Round to two decimal places.)
years. (Round to two decimal places.)
years. (Round to two decimal places.)
Round to the nearest cent.)
und to the nearest cent.)
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