Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 -$ 433,000 -$ 44,000
1 40,000 21,200
2 66,000 12,500
3 83,000 22,600
4 548,000 19,400
The required return on these investments is 14 percent.
a. What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. What is the NPV for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
c. What is the IRR for each project?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
d. What is the profitability index for each project?
Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.
e. Based on your answers in (a) through (d), which project will you finally choose?