capital+budgeting-11 - Answer Calculation of NPV WACC 14%...

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Unformatted text preview: Answer Calculation of NPV WACC 14% project A Project B year 1 2000 0.88 1754 5600 4911.2 2 2000 0.77 1538 5600 4306.4 3 2000 0.68 1350 5600 3780 4 2000 0.59 1184 5600 3315.2 5 2000 0.52 1038 5600 2906.4 10000 6864 28000 19219.2 cost 6000 18000 NPV 864 1219.2 PROJECT B SHOULD BE SELECTED AS IT HAS HIGH NPV PAY BACK PERIOD=COST OF THE PROJECT/ANNUAL CASH INFLOW ANNUAL CASH INFLOW PROJECT A 2000 PROJECT B 5600 PAY BACK PERIOD PROJECT A 3.00 PROJECT B 3.21 PROJECT A SHOULD BE SELECTED AS IT HA DISCOUNTED PAY BACK METHOD project A Project B year DISCOUNTED CASH INFLOWCUMULATIVE CASH INFLOW 1 1754 1754.00 4911.2 2 1538 3292.00 4306.4 3 1350 4642.00 3780 4 1184 5826.00 174.00 3315.2 5 1038 6864.00 0.17 2906.4 DISCOUNTED PAY BACK METHOD 4 AND .167 YEARS IRR IF DISCOUNT RATE: 20% year project A Project B 1 2000 0.83 1666 5600 4664.8 2 2000 0.69 1388 5600 3886.4 3 2000 0.58 1158 5600 3242.4 4 2000 0.48 964 5600 2699.2 5 2000 0.4 804 5600 2251.2 5980 16744 cost 6000 18000 NPV-20-1256 844-36.8 884 2475.2 0.950....
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This note was uploaded on 08/22/2010 for the course FINANCE FINC330 taught by Professor Lj during the Spring '09 term at University of Maryland Baltimore.

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capital+budgeting-11 - Answer Calculation of NPV WACC 14%...

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