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    Comparing Mutually Exclusive Project Investment Criteria

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    Consider the following two mutually exclusive project:

    Year Cash Flow (A) Cash Flow (B)
    0 -$322,574 -$23,426
    1 29,000 9,699
    2 54,000 8,919
    3 55,000 13,478
    4 395,000 11,486

    Whichever project you choose, if any, you require a 15 percent return on your investment.

    a) The payback period for projects A and B. (round answers to decimal places, e.g. 32.16)
    b) The discounted payback period for A and B. (round answers to decimal places, e.g. 32.16)
    c) The NPV for projects A and B. (round answers to decimal places, e.g. 32.16)
    d) The IRR for projects A and B. (round answers to decimal places, e.g. 32.16)
    e) The profitability index for projects A and B. (round answers to decimal places, e.g. 32.161)
    f) Based on your answers in (a) through (e) which project will you finally choose?

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    https://brainmass.com/business/capital-budgeting/comparing-investment-criteria-173576

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    Solution Summary

    This solution calculates values for each project as requested in each question. The Solution is provided in a Microsoft Excel document.

    $2.19

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