Unformatted text preview: d Project Comparison Decision
PBP 3.5 Accept IRR
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
• Dependent – A project whose
acceptance depends on the
acceptance of one or more other
• Mutually Exclusive – A project whose
acceptance precludes the acceptance
of one or more alternative projects.
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
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 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, [email protected]%,
the PBP IRR NPV@
and [email protected]%.
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This note was uploaded on 05/28/2013 for the course FINANCE economy taught by Professor Nill during the Fall '12 term at Bronx School Of Law And Finance.
- Fall '12