Working with your assigned group, please determine your answer to the questions below. We will discuss your group's responses during the live session this week. Consider the following two mutually exclusive projects: Year Cash Flow ($) - A Cash Flow ($) - B 0 -4,55,000 -65,000 1 58,000 31,000 2 85,000 28,000 3 85,000 25,500 4 5,72,000 19,000 Whichever project you choose, if any, you require a return of 11% on your investment. If you apply the payback criterion, which investment will you choose? If you apply the discounted payback criterion, which investment will you choose? If you apply the NPV criterion, which investment will you choose? If you apply the IRR criterion, which investment will you choose? If you apply the profitability index criterion, which investment will you choose? Based on your answers, which project will you finally choose?
Working with your assigned group, please determine your answer to the questions below. We will discuss your group's responses during the live session this week. Consider the following two mutually exclusive projects: Year Cash Flow ($) - A Cash Flow ($) - B 0 -4,55,000 -65,000 1 58,000 31,000 2 85,000 28,000 3 85,000 25,500 4 5,72,000 19,000 Whichever project you choose, if any, you require a return of 11% on your investment. If you apply the payback criterion, which investment will you choose? If you apply the discounted payback criterion, which investment will you choose? If you apply the NPV criterion, which investment will you choose? If you apply the IRR criterion, which investment will you choose? If you apply the profitability index criterion, which investment will you choose? Based on your answers, which project will you finally choose?
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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Working with your assigned group, please determine your answer to the questions below. We will discuss your group's responses during the live session this week.
Consider the following two mutually exclusive projects:
|
Year |
Cash Flow ($) - A |
Cash Flow ($) - B |
|
0 |
-4,55,000 |
-65,000 |
|
1 |
58,000 |
31,000 |
|
2 |
85,000 |
28,000 |
|
3 |
85,000 |
25,500 |
|
4 |
5,72,000 |
19,000 |
Whichever project you choose, if any, you require a return of 11% on your investment.
- If you apply the payback criterion, which investment will you choose?
- If you apply the discounted payback criterion, which investment will you choose?
- If you apply the NPV criterion, which investment will you choose?
- If you apply the
IRR criterion, which investment will you choose? - If you apply the profitability index criterion, which investment will you choose?
- Based on your answers, which project will you finally choose?
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