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Unformatted text preview: Period Cash Flows Cash Flows Cumulative 0 ($25,000) ($25,000.00) ($25,000.00) 1 20,000 18,181.82 ( 6,818.18) 2 10,000 8,264.46 1,446.28 3 8,000 6,010.52 7,456.80 4 6,000 4,098.08 11,554.88 Discounted Payback B = 1 + $6,818.18/$8,264.46 = 1.825 years. c. NPV A = $12,739,908; IRR A = 27.27%. NPV B = $11,554,880; IRR B = 36.15%. Both projects have positive NPVs, so both projects should be undertaken. d. At a discount rate of 5%, NPV A = $18,243,813. At a discount rate of 5%, NPV B = $14,964,829. At a discount rate of 5%, Project A has the higher NPV; consequently, it should be accepted....
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff

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