Find the payback period irr-npv, Business Economics

Assignment Help:

Your company's cost of capital is 12%. You are currently evaluating three projects that have the following cash flow streams:

Project

0

1

2

3

4

A

-10,000

4,000

4,000

4,000

4,000

B

-10,000

0

0

0

50,000

C

-1,000

500

500

500

500

a. Find the payback period, discounted payback period, IRR, and NPV for each of the three projects.

b. Use the payback period to evaluate options A and B. Which would you choose according to this method? Why does payback period give the wrong answer? 

c. Suppose projects A and C are mutually exclusive. Use the IRR to establish which of the two you should undertake. Why does IRR give the wrong answer? 

d. Determine whether Project A or C should be undertaken using incremental IRR. 

 

 


Related Discussions:- Find the payback period irr-npv

How does economic system influence the development process, How does econom...

How does economic system influence the development process? The development experience of free market or capitalist and command as socialist/communist countries is extremely d

Introduction to business economic, Ask question different between Mar...

Ask question different between Marginalism & incrementalism #Minimum 100 words accepted#

Economic principle, #questDuring the 1990s, technological advance reduced t...

#questDuring the 1990s, technological advance reduced the cost of computer chips. Explain, with the use of supply and demand diagrams, how the following markets are affected in ter

What is universal banking, It commonly refers to the combination of commerc...

It commonly refers to the combination of commercial banking and investment banking. It is a supermarket for both wholesaler n retailer financial services as it offers a huge range

Explain conditions necessary to achieve pareto efficiency, Problem: i) ...

Problem: i) Evaluate the following statement: "The First Theorem of Welfare Economics states that as long as producers and consumers act as perfect competitors and there ar

What are the limitations of balanced growth, What are the limitations of ba...

What are the limitations of balanced growth? The limitations of balanced growth: • The strategy of balanced growth is away from the resources of most poor countries; • Go

Case Study, Harvard Business Review Case Study 9-572-029 Fisher Price Toys....

Harvard Business Review Case Study 9-572-029 Fisher Price Toys... Need help with the following questions: 1. Should Fisher Toys lauch the ATV Explorer? 2. What price tag should the

What is the lewis model, What is the Lewis Model? The Lewis Model argue...

What is the Lewis Model? The Lewis Model argues economic growth needs structural change into the economy whereby surplus labour within traditional agricultural sector along wit

Lecturer, 1. Three clients of Disrup, Ltd P, Q and R are direct competitors...

1. Three clients of Disrup, Ltd P, Q and R are direct competitors in the retail business. In the first week of the year P had 300 customers Q had 250 customers and R had 200 custom

What is the average increase, Question (a) The XYZ Election Commission ...

Question (a) The XYZ Election Commission maintains data showing the voting age population, the number of registered voters, and the turnout for federal elections. The following

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd