George Company is evaluating two mutually exclusive projects with 3-year lives. Each project requires an investment of P50,000. The projects have the following "net returns" at the end of each year. Project 1 P10,000 Project 2 P30,000 Year 1 20,000 20,000 30,000 10,000 REQUIRED: 1. Determine the discounted or internal rates of return for both projects. Round answers to 3 decimals. 2. Determine the net present value of each project using an 11% discount rate. 3. Determine the profitability index of each project also. Round answers to 2 decimals. 2 3
George Company is evaluating two mutually exclusive projects with 3-year lives. Each project requires an investment of P50,000. The projects have the following "net returns" at the end of each year. Project 1 P10,000 Project 2 P30,000 Year 1 20,000 20,000 30,000 10,000 REQUIRED: 1. Determine the discounted or internal rates of return for both projects. Round answers to 3 decimals. 2. Determine the net present value of each project using an 11% discount rate. 3. Determine the profitability index of each project also. Round answers to 2 decimals. 2 3
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 15P
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