.5וComparing Investment Criteria. onsiuer uie 1onOwing two inutuanyexclusive projects:Cash Flow (B)1TTYearCash Flow (A)S415,000-$3,50049,0001,92057.0001,39074,0001,420530,0001,0504Whichever project you choose, if any, you require a 13 percent return on yourinvestment.a. If you apply the payback criterion, which investment will you choose? Why?b. If you apply the NPV criterion, which investment will you choose? Why?8If you apply the IRR criterion, which investment will you choose? Why2d. If you apply the profitability index criterion, which investment will youchoose? Why?e. Based on your answers in (a) through (d), which project will you finallychoose? Why?

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Comparing Investment Critéria. nsidel exclusive projects: Year Cash Flow (A) Cash Flow (B) $415,000 -$3,500 1 49,000 1,920 2 57.000 1,390 74,000 1,420 3 530,000 1,050 4. Whichever project you choose, if any, you require a 13 percent return on your investment. a. If you apply the payback criterion, which investment will you choose? Why? you apply the NPV criterion, which investment will you choose? Why? b. If K Ifyou appły the IRR criterion, which investment will you choose? Why2

Comparing Investment Critéria. nsidel exclusive projects: Year Cash Flow (A) Cash Flow (B) $415,000 -$3,500 1 49,000 1,920 2 57.000 1,390 74,000 1,420 3 530,000 1,050 4. Whichever project you choose, if any, you require a 13 percent return on your investment. a. If you apply the payback criterion, which investment will you choose? Why? you apply the NPV criterion, which investment will you choose? Why? b. If K Ifyou appły the IRR criterion, which investment will you choose? Why2

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....

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