Question:
Project S has a cost of $10,000 and is expected to produce cash flows of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cas flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12 percent. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should project should be selected?