PROJECT A PROJECT BInitial Outlay -60,000 -80,000Inflow year 1 17,000 18,000Inflow year 2 17,000 18,000Inflow year 3 17,000 18,000Inflow year 4 17,000 18,000Inflow year 5 17,000 18,000Inflow year 6 17,000 18,000 (NPV, PI, and IRR calculations) You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $60,000, and the initial cashoutlay associated with project B is $80,000. The required rate of return on both projects is 10 percent. The expected annual free cash inflows from each project are in thepopup window: Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.a. What is the NPV of project A?$ (Round to the nearest cent.)C

Capital budgeting refers to the method used for evaluating the viability of the project through net…

PROJECT A PROJECT B Initial Outlay -60,000 -80,000 Inflow year 1 17,000 18,000 Inflow year 2 17,000 18,000 Inflow year 3 17,000 18,000 Inflow year 4 17,000 18,000 Inflow year 5 17,000 18,000 Inflow year 6 17,000 18,00

PROJECT A PROJECT B Initial Outlay -60,000 -80,000 Inflow year 1 17,000 18,000 Inflow year 2 17,000 18,000 Inflow year 3 17,000 18,000 Inflow year 4 17,000 18,000 Inflow year 5 17,000 18,000 Inflow year 6 17,000 18,00

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2PB: Markoff Products is considering two competing projects, but only one will be selected. Project A...

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Question

PROJECT A    PROJECT B
Initial Outlay    -60,000    -80,000
Inflow year 1    17,000    18,000
Inflow year 2    17,000    18,000
Inflow year 3    17,000    18,000
Inflow year 4    17,000    18,000
Inflow year 5    17,000    18,000
Inflow year 6    17,000    18,000

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