5 accept irr irr 11 1147 13 reject npv 1424 0 reject

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Unformatted text preview: d Project Comparison Decision PBP 3.5 Accept IRR IRR 11 11.47% 13% Reject NPV -$1,424 $0 Reject PI 62 3.3 .96 1.00 Reject Certified Certified Financial Controller CFC 31 Other Project Relationships • Dependent – A project whose project whose acceptance depends on the acceptance of one or more other projects. • Mutually Exclusive – A project whose acceptance precludes the acceptance of one or more alternative projects. 63 Certified Certified Financial Controller CFC Potential Problems Under Mutual Exclusivity Ranking of project proposals may of project proposals may create contradictory results. A. Scale of Investment B. Cash-flow Pattern Cash Pattern C. Project Life 64 Certified Financial Controller CFC 32 A. Scale Differences Compare a small (S) and a small (S) and large (L) project. NET CASH FLOWS Project S Project L END OF YEAR 0 -$100 -$100,000 1 0 0 2 $400 $156,250 65 Certified Financial Controller CFC A. Scale Differences Calculate the PBP, IRR, NPV@10%, the PBP IRR NPV@ and PI@10%. Which project...
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