Calculate the payback period for each project

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Reference no: EM131328622

Sharpe Manufacturing is attempting to select the best of three mutually exclusive projects. The initial cash outflow and after-tax cash inflows associated with each project are shown in the following table.

Cash Flows	Project X	Project Y	Project Z
Initial Cash Outflow(CF_o)	$ 80,000	$ 130,000	$ 145,000
Cash Inflows(CF_i), years(t) = 1-5	27,000	41,000	43,000

a. Calculate the payback period for each project.

b. Calculate the NPV of each project, assuming that the firm has a cost of capital equal to 13 percent.

c. Calculate the IRR for each project.

d. Summarize the preferences dictated by each measure and indicate which project you would recommend. Explain why.

Reference no: EM131328622

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