There are two projects under consideration by the Rainbow Factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Year 1 Year 2 Year 3 Total Alpha $32,000 $22,500 $5,000 $59,500 Beta $7,500 $23,500 $28,000 $59,000 Calculate the payback, NPV, IRR & PI for both projects. Assume 10% Cost of capital. Which would you recommend?
There are two projects under consideration by the Rainbow Factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows: Year 1 Year 2 Year 3 Total Alpha $32,000 $22,500 $5,000 $59,500 Beta $7,500 $23,500 $28,000 $59,000 Calculate the payback, NPV, IRR & PI for both projects. Assume 10% Cost of capital. Which would you recommend?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6PB: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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There are two projects under consideration by the Rainbow Factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following
Year 1 | Year 2 | Year 3 | Total | |
Alpha |
$32,000 | $22,500 | $5,000 | $59,500 |
Beta | $7,500 | $23,500 | $28,000 | $59,000 |
Calculate the payback,
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