Answer to Question #146937 in Other for mayuri

Question

bc pvt ltd is considering two mutually exclusive capital investments. the projects expected net cash flows are as follows:

year project a project b
0 -375 -575
1 -300 190
2 -200 190
3 -100 190
4 600 190
5 600 190
6 926 190
7 -200 0
if you were told that each projects cost of capital was 12%, whic project sholud be selected using the NPV criteria? what is each projects IRR? what is the regular payback period for these two projects? what is the portfolio index for each project if the cost of capital is 12%?

Answer 1

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