6. Consider the following two mutually exclusive projects (F and G).
Year
Project F
Project G
0
- $ 8,500
-$ 10,620
1
1,620
7,000
2
3,500
4,120
3
6,080
1,660
IRR
12.36%
12.66%
Whichever project you choose, if any, you require a 10 percent return on your
investment.
a. Calculate the payback period for each project. (4 marks)
b. Calculate the net present value (NPV) of each project. (4 marks)
c. Based on (a), (b) as well as the given IRR, which project will you finally choose?
Explain. (2 marks)