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