Calculate the payback period

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A company director knows that with your expertise, you are able to provide a comprehensive analysis using different methods. The company presented two proposed capital projects that are Project A and Project B. Each project costs P10,000. The 12% cost of capital was proposed for each project. Expected projected net cash flows for the project are listed below:

To Be Expected Net Cash Flows

Year Proj. A Proj. B
0 (P10,000) (P10,000)
1 6,500 3,500
2 3,000 3,500
3 3,000 3,500
4 1,000 3,500

1. Calculate the payback period
2.Calculate the Net Present Value (NPV)
3. Calculate the Internal Rate of Return (IRR)
4.Calculate the Modified Internal Rate of Return (MIRR).
5.Which among the projects should be accepted if independent?
6. Which project, mutually exclusive should be accepted?
7.Which project would you prefer? Why?
8.After your calculation above, state the differences between the 2 projects.

 

Reference no: EM132928529

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