Assignment
Length: 800-1000 words
Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the project's ability to earn the company additional compensation. The 3 main tools used to make this evaluation are the pay-back period, net present value (NPV), and internal rate of return (IRR).
Table 1
Year Project #1 Project #2 Project #3
0 ($30,000) ($32,000) ($35,000)
1 $11,000 $15,000 $11,000
2 $11,000 $14,000 $11,000
3 $11,000 $11,000 $11,000
4 $11,000 $2,000 $11,000
5 $11,000 $500 $11,000
Table 2
Scenario NPV Rate
1 5%
2 5.5%
3 6%
Using the data in the tables above, answer the following questions:
Calculate the NPV for each project using each scenario's NPV rate. Show your work.
Calculate the pay-back period for each project. Show your work.
Calculate the IRR for each project. Show your work.
Which project would the company select using the NPV method in scenario 1? Explain your answer.
Which project would the company select using the NPV method in scenario 2? Explain your answer.
Which project would the company select using the NPV method in scenario 3? Explain your answer.
Which project would the company select using the pay-back period? Explain your answer.
Which project would the company select using the IRR method? Explain your answer.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.