Purchase Solution

Capital budgeting

Not what you're looking for?

Ask Custom Question

11. Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows:

YEAR PROJECT A PROJECT B
0 $100,000 $100,000
1 32,000 0
2 32,000 0
3 32,000 0
4 32,000 0
5 32,000 $200,000

The required rate of return on these projects is 11 percent.

a. What is each project's payback period?
Project A
Project B

b. What is each project's net present value?
Project A
Project B

c. What is each project's internal rate of return?
Project A
Project B

d. What has caused the ranking conflict?
Project A
Project B

e. Which project should be accepted? Why?
Project A
Project B

Purchase this Solution

Solution Summary

The solution explains how to calculate Payback, NPV, IRR for the projects and make the accept/reject decision

Purchase this Solution


Free BrainMass Quizzes
Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.