Determine which project or projects should be accepted

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You are financial analyst for YADIKA company . the director of capital budgeting has asked you to analyze two proposed capital investments,project L and S. each project has a cost of birr 100 and the cost for each project is 10% the project expected net cash flows are as follows year 0 project L 1000 birr project S 100, year 1 project L 10 project S 70, year 2 project L 60 project S 50, year 3 project L 80 project S 20.

Required

Question 1: calculate each project payback period (PBP), net present value (NPV) ,and profitability index (PI)

Question 2: Which project or projects should be accepted if they are independent ?

Question 3: which project or projects should be accepted if they are mutually exclusive ?

Reference no: EM132600097

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