!·1 .EE. 1 TAlarm al|1 No Spac Headingl Head nge reading Paragraph Styles -20,00

Question

!·1 .EE. 1 TAlarm al|1 No Spac Headingl Head nge reading Paragraph Styles -20,000 8,000 6,000 5,000 0 2 3. You have the following information on four mutually exclusive projects Project NPV IRR 20% $40,000 Which project(s) should you choose? 4. A firm is evaluating two projects X and Z. Project X has an instial inv cash inflows at the end of each of the next five years of $25,000. Project Z has a initial investment of $120,000 and cash inflows at the end of each of the next five years of $40,000. Assume the cost of capital of 10% which projects) should the firm accept if

Explanation / Answer

Answer.

Project D is the best method to choose if we go as per NPV Rule because NPV is highest for the project D as well as IRR also good for the comparing all projects with D.

In other case if we go with IRR rule B we need to choose but in this case NPV is very less so better to choose Project D assuming that investment is same for all the projects.

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