3) Project A costs $47,800 with cash inflows of $34,200 in Year 1 and $28,700 in

Question

3) Project A costs $47,800 with cash inflows of $34,200 in Year 1 and $28,700 in Year 2. 3) Proj ect B costs $63,200 with cash inflows of $21,900 in Year 1 and $59,200 in Year 2. ese projects are independent and have an assigned discount rate of 15 percent. A) (2pts) Draw a timeline for Project A and place all given dolar amounts on your timeline. Find NPV and IRR for Project you wish, then list the keys used for these calculations A. You ean use your financial calculator ir B) (2pts) Draw timeline for Project B and place all given dolar amounts on your timeline. Find NPV and IRR for Project B. You can use your financial calculator, then list the keys used for these calculations. C) 2pts) Based on your findings in (A) and (B), explain which project should you accept and why

Explanation / Answer

= 3636.97

IRR of Project A should be such that inflow = outflow and NPV = 0.

So IRR = 21 %

= 603.17

IRR of Project B should be such that inflow = outflow and NPV = 0.

So IRR =~ 15.50 %

As per IRR , Project A is preferred being greater.

So, Project A should be accepted.

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.