Business, 12.12.2019 05:31 AM28

Consider the following cash flows for two mutually exclusive capital investment projects. the required rate of return is 12%. use this information for the next 5 questions.

year project a cash flow project b cash flow
0 -$32,400 -$14,400
1 9,600 4,200
2 9,600 4,200
3 9,600 4,200
4 8,400 3,600
5 8,400 3,600
6 6,000 3,600

1. what is the irr of project a?

a) 18.69% c) 10.05% e) 16.58%
b) 12.97% d) 16.32%

2. what is the payback period of project a?

a) 3.5 years c) 4.57 years e) 3.8 years
b) 3.43 years d) 3.57 years

3. what is the profitability index of project a?

a) 1.128 d) 1.09
b) 1.045 e) 1.117
c) .98

4. calculate the net present value of project b. a) $1,842 d) $1,415
b) $3,802 e) $2,223 c) $3,471

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