Assignment on project valuation

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Reference no: EM133076392

Project Valuation: Consider the following two projects. Assume that the opportunity cost of capital is 10% per year. All dollars are in thousands. 

 

Cash flows

Project

Today

Year 1

Year 2

Year 3

A        

-75

+15

+60

+37.5

B

-195

+63

+64

+153

A. What are the NPV and IRR of each project? 

B. What is the payback period of each project? 

C. Assuming you can undertake either or both of these projects, which project(s) should you undertake? Why? 

D. Assuming these projects are mutually exclusive, i.e. you can only choose one project, which would you undertake? Why?

Reference no: EM133076392

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