FIN370_wk4TeamC_caledonia - Running head: CALEDONIA 1...

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Running head: CALEDONIA Caledonia Holly Hyatt, Billy Harper, Joseph Desimone, Jerrin Mathew, Christopher Lowe University of Phoenix FIN/370 Nikki Silver 08/29/2011 1
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Caledonia is considering two different types of projects and the cash flows are as follows. Team C will calculate which project would be better to proceed with. Listed below are the questions we will answer: Caledonia is considering two additional mutually exclusive projects. The cash flows associated With these projects are as follows: YEAR PROJECT A PROJECT B 0 -$100,000 -$100,000 1 32,000 0 2 32,000 0 3 32,000 0 4 32,000 0 5 32,000 $200,000 The required rate of return on these projects is 11 percent. a. What is each project’s payback period? b. What is each project’s net present value? c. What is each project’s internal rate of return? d. What has caused the ranking conflict? e. Which project should be accepted? Why? 2
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FIN370_wk4TeamC_caledonia - Running head: CALEDONIA 1...

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