Explore BrainMass
Share

Explore BrainMass

    Caledonia: Mutually Exclusive Projects

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Please help with Part F.

    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?
    b. What is each project's net present value?
    c. What is each project's internal rate of return?
    d. What has caused the ranking conflict?
    e. Which project should be accepted? Why?
    f. The factors Caledonia would have to consider if they were doing a lease versus a buy.

    © BrainMass Inc. brainmass.com October 9, 2019, 11:52 pm ad1c9bdddf
    https://brainmass.com/business/net-present-value/caledonia-mutually-exclusive-projects-270546

    Solution Summary

    This solution show step-by-step calculations in an Excel file to determine the payback period, NPV, IRR, ranking conflict and the factors Caledonia would have to consider if they were doing a lease versus a buy.

    $2.19