Reference no: EM131230062

Assignment- Capital Budgeting Part 1

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You are considering the following three projects. A &B are mutually exclusive while C is independent.

Following are their expected cash flows

year	project A	Project B	Project C
0	-60,000.00	-40,000.00	-20,000.00
1	0	40,000.00	35,000.00
2	82,000.00	40,000.00	30,000.00
3	60,000.00	20,000.00	2,000.00
4	20,000.00	10,000.00	-40,000.00

Assuming no capitol rationing a required rate of return (cost of capital) of 11% for all three projects.

1) Calculate NPV for each project.
2) Calculate IRR(s) for each project.
3) Calculate PI for each project.
4) Using cost of capital, as a financing and reinvestment rate, calculate MIRR for each project.
5) If A&B profiles cross, calculate the exact crossover point between project A & B.
6) Which of the three projects, if any, should be accepted and why?