Net cash flows and npvs for different discount rate

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Net cash flows and NPVs for different discount rate for projects S and L are given below: IRRs = 13.1%, IRRl = 11.4%. Crossover rate = 8.1%

Year (t) . Net cash flows . Discount rate (%) NPVs NPVl

Project S Project L 0% $800 $1100

0 $(3000) $(3000) 5 554.32

1 1500 400 10 161.33

2 1200 900 15 (90.74) (259.24)

3 800 1300 20 (309.03) (565.97)

4 300 1500

1) Calculate the payback period for the project S and project L

2) Calculate NPVs for 5% and NPVl for 10%. Fill the table

3) of products are mutually exclusive, which project would you accept?

i) at 5%

ii) at 15%

4) If projects are not mutually exclusive, which project would you accept?

i) at 5%

ii) at 15%

Reference no: EM132433962

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