P10–24 All techniques: Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. PLEASE HELP; I DO NOT HAVE A FINANCIAL CALCULATOR AND I CANNOT USE EXCEL SPREADSHEETS; I HAVE A TI84 PLUS, PLEASE BREAK DOWN ON HOW TO GET THE IRR .... I REALLY DON'T UNDERSTAND. THANKS!
Cash flows |
Project A |
Project B |
Project C |
Initial investment (CF_{0}) |
−$60,000 |
−$100,000 |
−$110,000 |
Cash inflows (CF_{t}), t = 1 to 5 |
20,000 |
31,500 |
32,500 |
Hi, I have answered all the parts, attached related working and gave explanation aswell.Please get back to me for any other clarifications. Hope this helps!
a,b)
C)
Using the NPV the preference for accepting the project will be based on highest positive NPV to lowest positive NPV
so the preference will be, Project B, Project A, Project C
Using the IRR the preference for accepting the project will be based on higest IRR to lowest IRR which are greater than cost of capital(13%)
so the preference will be, Project A, Project B, Project C
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