# C 1 what is the npv for each project do not round

• Homework Help
• 44
• 86% (21) 18 out of 21 people found this document helpful

This preview shows page 31 - 38 out of 44 pages.

3.40 ± 1%2.21 ± 1%
3.87 ± 1%
c-1What is the NPV for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
If you apply the NPV criterion, which investment will you choose?
What is the IRR for each project? (Round your answers to 2 decimal places. (e.g., 32.16))
Project A% d-2If you apply the IRR criterion, which investment will you choose?18.14 ± 1%
Project Be-1What is the profitability index for each project? (Do not round intermediate calculations and roundyour final answers to 3 decimal places. (e.g., 32.161))Project Be-2If you apply the profitability index criterion, which investment will you choose?Based on your answers in (a) through (e), which project will you finally choose?Project AProject BExplanation:a.The payback period for each project is:1.173 ± 0.1%
Note: Intermediate answers are shown below as rounded, but the full answer was used to completethe calculation.CF(A)c.d.e.CFo–\$350,000CFo–\$350,000CFo\$0C01\$45,000C01\$45,000C01\$45,000F011F011F011C02\$65,000C02\$65,000C02\$65,000F022F022F022C03\$440,000C03\$440,000C03\$440,000F031F031F031I = 15%IRR CPTI = 15%NPV CPT18.14%NPV CPT\$32,589.76\$382,589.76PI = \$382,589.76 / \$350,000 = 1.093CF(B)c.d.e.CFo–\$50,000CFo–\$50,000CFo\$0C01\$24,000C01\$24,000C01\$24,000F011F011F011C02\$22,000C02\$22,000C02\$22,000F021F021F021C03\$19,500C03\$19,500C03\$19,500F031F031F031C04\$14,600C04\$14,600C04\$14,600F041F041F041I = 15%IRR CPTI = 15%