Reference no: EM133061537
CAPITAL BUDGETING CRITERIA: A firm with a 14% WACC is evaluating two projects for this year's capital budget. After tax cash flows, including depreciation, are as follows:
0__________1_________2_________3___________4__________5
Project M -$30,000 $10,000 $10,000 $10,000 $10,000 $10,000
Project N -$90,000 $28,000 $28,000 $28,000 $28,000 $28,000
-Calculate NPV, IRR, MIRR, payback, and discounted payback for each project.
-Assuming the projects are independent, which one(s) would you recommend?
-If the projects are mutually exclusive, which would you recommend?
-Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?
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