Question

A firm has a WACC of 8% and is deciding between two mutually exclusive projects. Project...

A firm has a WACC of 8% and is deciding between two mutually exclusive projects. Project A has an initial investment of $63. The additional cash flows for project A are: year 1 = $20, year 2 = $39, year 3 = $67. Project B has an initial investment of $73.The cash flows for project B are: year 1 = $60, year 2 = $45, year 3 = $32. Find the Payback and NPV for each project

Homework Answers

Answer #1

CF = Cash flow

DF = Discounting factor (8%, n years)

DCF = Discounted cash flow = CF x DF

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