Project Alpha requires an outlay of $10,000 immediately. Project Alpha has a 1-year life and is expected to produce a net cash flow at the end of one year of $20,000. Project Beta, a mutually exclusive alternative to Alpha, requires an outlay of $20,000 immediately. It too is expected to have a 1-year life and to produce a net cash flow at the end of one year of $35,000. a. Compute the internal rate of return for both projects. Compute the NPV for both projects, using a cost of capital of 10 percent. b. Which project should be undertaken?

Q: Project L requires an initial outlay at t = 0 of $84,155, its expected cash inflows are $14,000 per…

A: Companies have different alternatives to invest their money in, but they should always compare the…

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A: NPV (Net Present Value) is a financial metric used to evaluate the profitability of an investment by…

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A: NPV means Net present value.It is a capital budgeting technique used for making investment…

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A: Using the IRR function in Excel

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A: Here, The present value of net cash inflows is 'PVCI' Future value is 'FV' Cost of capital is 'r'…

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A: Project's Payback period = Initial Investment / Annual Cashflow

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A: Formulas:

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A: MIRR is the modified internal rate of return which can calculated by using excel MIRR function.

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A: Using excel MIRR function

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.