Part 1 Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive projects. The required rate of return is 15% and the target payback is 4 years. Explain which project is preferable under each of the four capital budgeting methods mentioned above: Table 1 Cash flows for two mutually exclusive projects Year Investment A Investment B -$5,000,000 -5,000,000

Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter11: The Basics Of Capital Budgeting
Section: Chapter Questions
Problem 11P: CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S costs 17,000, and its expected...
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Part 1
Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive
projects. The required rate of return is 15% and the target payback is 4 years. Explain which project is
preferable under each of the four capital budgeting methods mentioned above:
Table 1
Cash flows for two mutually exclusive projects
Year
Investment A
Investment B
-$5,000,000
-5,000,000
1
$1,500,000
$1,250,000
2
$1,500,000
$1,250,000
3
$1,500,000
$1,250,000
4
$1,500,000
$1,250,000
5
$1,500,000
$1,250,000
$1,500,000
$1,250,000
7
$2,000,000
$1,250,000
8.
$1,600,000
Transcribed Image Text:Part 1 Please calculate the payback period, IRR, MIRR, NPV, and PI for the following two mutually exclusive projects. The required rate of return is 15% and the target payback is 4 years. Explain which project is preferable under each of the four capital budgeting methods mentioned above: Table 1 Cash flows for two mutually exclusive projects Year Investment A Investment B -$5,000,000 -5,000,000 1 $1,500,000 $1,250,000 2 $1,500,000 $1,250,000 3 $1,500,000 $1,250,000 4 $1,500,000 $1,250,000 5 $1,500,000 $1,250,000 $1,500,000 $1,250,000 7 $2,000,000 $1,250,000 8. $1,600,000
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