Solution-Calculate each project net present value or npv

Calculate each project net present value or npv

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Reference no: EM132783600

"Millie's Ice Cream" Company Limited has two (2) projects under consideration. The cash flows for each project are shown in the following table. The firm will be using a bank loan that has an annual interest of 13% to finance this project.

Initial Investment (CF0)    Project A    Project B
                                          $212,000    $212,000
Year                                                    Cash Inflows (CFt)

1 $62,000 $90,000
2 $62,000 $80,000
3 $62,000 $65,000
4 $62,000 $55,000
5 $62,000 $40,000

Problem a. Calculate each project's net present value (NPV). Which project is preferred according to this method?

Problem b. Calculate each project's payback period. Which project is preferred according to this method?

Problem c. Given the net present vales (NPVs) calculated in part a, which project will have a greater Internal Rate of Return (IRR)? Please provide a brief explanation for your response.

Reference no: EM132783600

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Calculate each project net present value or npv

Reference no: EM132783600

Reference no: EM132783600

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