Rafael Corporation has two projects under consideration. The cash flows for each project are shown in the following table. The firm has a 16% cost of capital Project A Project B Initial Cash Outflow Php400,000 Php400,000 Year Cash Inflows 1 70,000 190,000 2 100,000 160,000 3 130,000 130,000 4 160,000 100,000 5 190,000 70,000 1.Compute for the Payback Period of the two projects. 2.Compute for the Net Present Value of the two projects. 3.Considering the Payback Period and Net Present Value, Which of the two project would you recommend and why?
Rafael Corporation has two projects under consideration. The cash flows for each project are shown in the following table. The firm has a 16% cost of capital Project A Project B Initial Cash Outflow Php400,000 Php400,000 Year Cash Inflows 1 70,000 190,000 2 100,000 160,000 3 130,000 130,000 4 160,000 100,000 5 190,000 70,000 1.Compute for the Payback Period of the two projects. 2.Compute for the Net Present Value of the two projects. 3.Considering the Payback Period and Net Present Value, Which of the two project would you recommend and why?
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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Rafael Corporation has two projects under consideration. The cash flows for each project are shown in the following table. The firm has a 16% cost of capital
|
Project A |
Project B |
|
|
Initial |
Php400,000 |
Php400,000 |
|
Year |
|
|
|
1 |
70,000 |
190,000 |
|
2 |
100,000 |
160,000 |
|
3 |
130,000 |
130,000 |
|
4 |
160,000 |
100,000 |
|
5 |
190,000 |
70,000 |
1.Compute for the Payback Period of the two projects.
2.Compute for the
3.Considering the Payback Period and Net Present Value, Which of the two project would you recommend and why?
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