Question
PROJECT A PROJECT B Initial Outlay minus−$5000050,000minus −$7000070,000 Inflow year 1 1200012,000 1300013,000 Inflow year 2 ...
|
PROJECT A |
PROJECT B |
|||
|
Initial Outlay |
minus−$5000050,000minus |
−$7000070,000 |
||
|
Inflow year 1 |
1200012,000 |
1300013,000 |
||
|
Inflow year 2 |
1200012,000 |
1300013,000 |
||
|
Inflow year 3 |
1200012,000 |
1300013,000 |
||
|
Inflow year 4 |
1200012,000 |
1300013,000 |
||
|
Inflow year 5 |
12 00012,000 |
1300013,000 |
||
|
Inflow year 6 |
12 00012,000 |
1300013,000 |
||
(NPV, PI, and IRR calculations) You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $50 comma 000, and the initial cash outlay associated with project B is $70 comma 000. The required rate of return on both projects is 10 percent. The expected annual free cash inflows from each project are in the popup window: LOADING.... Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.
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