business finance question 3

Show work to each question.

Question 8


Whichever project is chosen, if any, you require a 5% return on your investment.

What is the payback period for each project?  If you base your decision on which project has the shortest payback, which will you choose?

 

 

Question 9

•  Whichever project is chosen, if any, you require a 5% return on your investment.

What is the internal rate of return for each project?  If you base your decision on the IRR, which will you choose?

Question 10

Whichever project is chosen, if any, you require a 5% return on your investment.

10. a.  The CEO of your company notes that both projects cost the same, and both last for 5 years.  Therefore, she suggests that the company pursue the project with the shortest payback.  However, she does not want to be short sighted, and wants to know which project adds the most value to the company.  What is the net present value of each project?  

10. b. Considering the answers to questions 1, 2, and 3a, which project should you recommend?

 

 


 
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