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    IRR NPV of two projects

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    Comparing two projects
    Project A
    cost of capital of 12%
    life of project is 20 years
    annual cash flow 350,000
    initial cost 1,250,000
    salvage value 250,000

    project b

    cost of capital of 12%
    life of project is 20 years
    annual cash flow 400,000
    initial cost 1,400,000
    salvage value 110,000

    What is the payback period?
    what is the npv of the the two projects?
    what is the IRR of both projects?
    What is the profitability index?
    which of the two projects should be choosen and which criteria should be used to aid the decision?

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    Solution Preview

    Comparing two projects
    Project A
    cost of capital of 12%
    life of project is 20 years
    annual cash flow 350,000
    initial cost 1,250,000
    salvage value 250,000

    Project B

    cost of capital of 12% ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what is the payback period.

    $2.19

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