Calculate each projects net present value


Question 1: Calculate each project's Net Present Value (NPV), assuming your firm's weighted average cost of capital (WACC) is 10%.

Question 2: Calculate each project's Internal rate of Return (IRR).

Question 3: Plot NPV profiles for both projects on a graph (Note: three data points for each project are sufficient).

Question 4: Assuming that your firm's WACC is 10%:

(1) If the projects are independent which one(s) should be accepted?

(2) If the projects are mutually exclusive which one(s) should be accepted

Year                Project A         Project B

0 (Now)         ($10,000)        ($10,000)

1                        6,500              3,500

2                        3,000              3,500

3                        3,000              3,500

4                        1,000              3,500

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Finance Basics: Calculate each projects net present value
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