You are considering two mutually exclusive projects with the following cash flows. The discount rate is 7.5 percent: YEAR PROJECT N PROJECT Y - P21,000,000 - P21,000,000 1 7,200,000 8,500,000 (a) Calculate the payback period of each project. ( ) (b) Compute the net present value of the two projects. ( (c) Which project should be accepted? 2 4,900,000 5,200,000 3 9,100,000 4,900,000 4 6,100,000 8,700,000

You are considering two mutually exclusive projects with the following cash flows. The discount rate is 7.5 percent: YEAR PROJECT N PROJECT Y - P21,000,000 - P21,000,000 1 7,200,000 8,500,000 (a) Calculate the payback period of each project. ( ) (b) Compute the net present value of the two projects. ( (c) Which project should be accepted? 2 4,900,000 5,200,000 3 9,100,000 4,900,000 4 6,100,000 8,700,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 7P

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