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Unformatted text preview: investment, and the Payback Period (PP). Based upon these two investment criteria, rank the projects in descending order (from best to worst). 2. For each set of project cash flows, calculate the Internal Rate of Return (IRR). Based upon this investment criterion, rank again the projects (from best to worst). 3. For each set of project cash flows, calculate the Net Present Value (NPV), using discount rates of 8%, 10%, and 12%. For each discount rate, rank the projects. 4. Why do the NPV rankings change as the discount rate increases? 5. Why does the ranking from the IRR calculations differ from the NPV rankings? 6. If the projects were mutually exclusive and the firms cost of capital was 10%, which project would you choose? Explain the reasoning behind your choice. 1...
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This note was uploaded on 09/21/2009 for the course B 340 taught by Professor Narg during the Spring '09 term at Washington University in St. Louis.
- Spring '09