alculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively. Which project(s) should be accepted if:
alculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively. Which project(s) should be accepted if:
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 14P
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Question
ASAP!! IN 20 minns
- M/s Sons & Sons is considering two projects, A & B, with
cash flows as shown below:
period |
Cash Flow of |
|
Project A |
Project B |
|
0 |
-90,000 |
-150,000 |
1 |
30,000 |
72,000 |
2 |
30,000 |
35,000 |
3 |
50,000 |
40,000 |
4 |
30,000 |
25,000 |
- Calculate discounted payback period,
net present value andinternal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively. - Which project(s) should be accepted if:
(i) The projects are mutually exclusive and there is no capital constraint.
(ii) The projects are independent and there is no capital constraint.
(iii) The projects are independent and there is a total of $100,000 of financing for capital outlays in the coming period.
- Why the cost of capital for A might be higher than for B. State possible reason(s)
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