What is the payback for each project

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Reference no: EM132055992

GIVEN: Two Investment proposals

INVESTMENT A INVESTMENTB

Initial Investment

$500,000 $500,000

Cash Flows:

1.0 $200,000 $300,000

2.0 $100,000 $100,000

3.0 $100,000 $100,000

4.0 $200,000 $100,000

5.0 $76,407 $110,833

1. What is the ‘Payback’ for each project?

2. Under 'Payback',Which project is superior?

3. Give an advantage/disadvantage associated with the ‘Payback’ method.

4. What is the ‘IRR’ for each project?

5. IF WACC = 12%, evaluate both proposals.

6. Give advantage/disadvantage associated with the ‘IRR’ method.

Reference no: EM132055992

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