Ch11_P1sol - NPV PI IRR and MIRR If the projects are...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 11, Problem 1 Solution 1. You are considering an investment in two projects, A and B. Both projects will cost $50,000, and the projected cash flows are as follows: Year Project A Project B 1 20,000 35,000 2 25,000 30,000 3 30,000 25,000 4 35,000 20,000 5 40,000 15,000 a. Assuming that the WACC is 12%, calculate the payback period, discounted payback period,
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: NPV, PI, IRR, and MIRR. If the projects are mutually exclusive, which project should be selected? Worksheet: Formulas: b. Create an NPV profile chart for projects A and B. What is the exact crossover rate for these two projects? Worksheet: Formulas: -20,000 20,000 40,000 60,000 80,000 100,000 120,000 0% 10% 20% 30% 40% 50% 60% 70% NPV Profiles NPVA NPVB...
View Full Document

This note was uploaded on 02/14/2011 for the course FINANCE 615 taught by Professor Green during the Fall '09 term at UMBC.

Page1 / 5

Ch11_P1sol - NPV PI IRR and MIRR If the projects are...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online