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

Is foreign debt a problem, Is foreign debt a problem? Foreign debt is ...

Is foreign debt a problem? Foreign debt is the whole amount owed overseas through a country at an exact moment in time. Debt is a problem since • High debt imply high inter

Elasticity of demand, Explain the elasticity of price expectations?

Explain the elasticity of price expectations?

Quantitative , how many statics numericals in quantitative economics

how many statics numericals in quantitative economics

Feasibility studies, c) Compare and contrast two advantages of refurbishing...

c) Compare and contrast two advantages of refurbishing an existing building with two advantages of developing a Greenfield site.

How can trade agreements assist development, How can trade agreements assis...

How can trade agreements assist development? A trade agreement is while two or more countries to by decrease or abolish tariffs, non-trade and quotas barriers which are establ

Differentiate essential and adequate condition for growth, What is the diff...

What is the difference between an essential and adequate condition for growth? Essential and adequate conditions are helpful analytical and evaluative elements. As like exampl

What are the limits of national income statistics, What are the limits of n...

What are the limits of national income (NY) statistics in measuring development within a country? National income statistics simply show changes in GDP (Gross Domestic Product)

Monopolly, explain how a price disciminating monopoly increases profits

explain how a price disciminating monopoly increases profits

Market analysis, The Australian government administers two programs that af...

The Australian government administers two programs that affect the market for cigarettes. First, media campaigns and labelling requirements aimed at making public aware of the dan

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