Comparison of investment based on payback npv irr and

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Comparison of Investment based on Payback, NPV, IRR and Profitability Index

Consider the following two mutually exclusive projects:

Year

Cash flow (A)

Cash flow (B)

0

-$262,782

-$27,554

1

27,300

10,410

2

51,000

11,010

3

51,000

10,196

4

393,000

10,971

Whichever project you choose, if any, you require a 15 percent return on your investment.
Required:
(a) The payback period for project A and B is _____ and _____ years, respectively. (Round your answers to 2 decimal places, e.g. 32.16)
(b) The discounted payback period for project A and B is _____ and _____ years, respectively. (Round your answers to 2 decimal places, e.g. 32.16)
(c) The NPV for project A and B is $_____ and $_____, respectively. (Round your answers to 2 decimal places, e.g. 32.16)
(d) The IRR for project A and B is _____ percent and _____ percent, respectively. (Do not include the percent sign (%). Round your answers to 2 decimal places, e.g. 32.16)
(e) The profitability index for project A and B is _____ and _____, respectively. (Round your answers to 3 decimal places, e.g. 32.161)
(f) Based on your answers in (a) through (e), you will finally choose Project _____.

Reference no: EM13356057

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