Question

# Project S has a cost of \$9,000 and is expected to produce benefits (cash flows) of...

Project S has a cost of \$9,000 and is expected to produce benefits (cash flows) of \$2,700 per year for 5 years. Project L costs \$26,000 and is expected to produce cash flows of \$7,100 per year for 5 years.

1. Calculate the two projects' NPVs, assuming a cost of capital of 10%. Round your answers to the nearest cent.

 Project S \$ ________ Project L \$ ________

Which project would be selected, assuming they are mutually exclusive?
_________________

2. Calculate the two projects' IRRs. Round your answers to two decimal places.
 Project S ________ % Project L ________ %

Which project would be selected, assuming they are mutually exclusive?
_________________

3. Calculate the two projects' MIRRs, assuming a cost of capital of 10%. Round your answers to two decimal places.

 Project S ________ % Project L ________ %

Which project would be selected, assuming they are mutually exclusive?
_________________

4. Calculate the two projects' PIs, assuming a cost of capital of 10%. Round your answers to two decimal places.
 Project S ________ Project L ________

Which project would be selected, assuming they are mutually exclusive?
_________________

Which project should actually be selected?
_________________

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