Solution-Determine the discounted or internal rates of

Determine the discounted or internal rates of return

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Problem - George Company is evaluating two mutually exclusive projects with 3-year lives. Each project requires an investment of P50,000. The projects have the following net returns at the end of each year.

	Project 1	Project 2
Year 1	P10,000	P30,000
Year 2	20,000	20,000
Year 3	30,000	10,000

Required -

1. Determine the discounted or internal rates of return for both projects. Round answers to 3 decimals.

2. Determine the net present value of each project using an 11% discount rate.

3. Determine the profitability index of each project also. Round answers to 2 decimals.

4. What can you conclude about the effect of timing of the cash flows has upon a project's IRR and net present value?

Reference no: EM133007117

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Determine the discounted or internal rates of return

Reference no: EM133007117

Reference no: EM133007117

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