Compute the (a) net present value, (b) internal rate of return, (c) payback period for each of the following projects. The firm’s required rate of return is 14%.
|
YEAR |
PROJECT A |
PROJECT B |
|
0 |
$(270,000) |
$(300,000) |
|
1 |
120,000 |
0 |
|
2 |
120,000 |
(80,000) |
|
3 |
120,000 |
555,000 |
Which project(s) should be purchased if they are independent? Which project(s) should be purchased if they are mutually exclusive?
