Calculate the net present value of projects

Reference no: EM13752331

You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Required rate of return on Project A is 10% and on project B is 13%.

Project A		Project B
Year	CFs	Year	CFs
0	-75,000	0	-70,000
1	19,000	1	10,000
2	48,000	2	16,000
3	12,000	3	72,000

a) Calculate the Net Present Value (NPV) of both projects. Which project should the firm choose based on the NPV criteria?

b) Calculate the Internal Rate of Return (IRR) of both projects. Which project should the firm choose based on the IRR criteria?

Reference no: EM13752331

Questions Cloud

Analyze the potential pitfalls in capital budgeting practice : Analyze the potential pitfalls in his capital budgeting practices that George should be aware of.

Write research paper on network cost assessment : Write Research paper on network cost assessment

Identify causes of problem in tourism development in country : Identify the causes of any problems in tourism development in the country or region and cite specific readings relevant to tourism development planning in Hall.

Initalize the element with appropriate integer values : delcare and array of integer of size 10 and initalize the element with appropriate integer values

Calculate the net present value of projects : Calculate the Net Present Value (NPV) of both projects. Which project should the firm choose based on the NPV criteria? Calculate the Internal Rate of Return (IRR) of both projects. Which project should the firm choose based on the IRR criteria?

How does capital budgeting promote the financial health : Critically reflect on the importance of capital budgeting. Why is this such a heated subject in many boardrooms? How does capital budgeting promote the financial health of an organization

Improve its profits and reduce price of its good or service : If a company employees technology to reduce its costs, improve its profits, and reduce the price of its good or service, how exactly is that a problem, Kris

Leadership ethics and integrity : Leadership Ethics and Integrity. One critical part of a leader's role is ethics and integrity. As you prepare your action plan, consider the ethics of leadership. Effective leaders inspire trust through their behaviors and personal integrity.

Consolidated annual financial statements : What are the main components of Zain "Consolidated annual financial statements and independent auditor's report 31 December 2013"? And Zain financial statements are prepared in conformity with which standards?

User Account

All Pages