The net cash flow per year for the investment projects A and B, is presented in the table below. Expected Net Cash Flow ($) Project 0 1 2 3 4 A -10,000 6500 3000 3000 1000 B -10,000 3500 3500 3500 3500 Calculate the NPV, IRR, PI, and PVR for the cash flows given in the following table. Assume the minimum acceptable rate of return of 8%. Which projects should be accepted if they are independent projects? Would the selection of the projects change if the cost of capital were 12%?
The net cash flow per year for the investment projects A and B, is presented in the table below. Expected Net Cash Flow ($) Project 0 1 2 3 4 A -10,000 6500 3000 3000 1000 B -10,000 3500 3500 3500 3500 Calculate the NPV, IRR, PI, and PVR for the cash flows given in the following table. Assume the minimum acceptable rate of return of 8%. Which projects should be accepted if they are independent projects? Would the selection of the projects change if the cost of capital were 12%?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1CMA
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The net cash flow per year for the investment projects A and B, is presented in the table below.
Expected Net Cash Flow ($)
Project | 0 | 1 | 2 | 3 | 4 |
A | -10,000 | 6500 | 3000 | 3000 | 1000 |
B | -10,000 | 3500 | 3500 | 3500 | 3500 |
Calculate the NPV, IRR, PI, and PVR for the cash flows given in the following table. Assume the minimum
acceptable rate of return of 8%. Which projects should be accepted if they are independent projects?
Would the selection of the projects change if the cost of capital were 12%?
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