Capital budgeting
Not what you're looking for?
B6. (Investment criteria) Consider the cash flows for the two capital budgeting projects given
here. The cost of capital is 10%.
a. Calculate the NPV for both projects.
b. Calculate the IRR for both.
c. Calculate the PI for both.
d. Calculate the MIRR for both.
e. Calculate the payback for both.
f. Which is the better project? Why?
YEAR 0 1 2 3 4
Project A −25,000 10,000 10,000 10,000 10,000
Project B −12,500 5,000 5,000 5,000 5,000
Purchase this Solution
Solution Summary
The solution explains the calculation of NPV, IRR, PI, MIRR and payback for the given projects
Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.