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CAPITAL BUDGETING CRITERIA A firm with a 14% VVACC is evaluating two projects for this year’s capital budget. After-tax cash flows, including depreciation, are as follows: a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project. b. Assuming the projects are independent, which one(s) would you recommend? c. If the projects are mutually exclusive, which would you recommend? d. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter 11, Problem 7P
Textbook Problem

CAPITAL BUDGETING CRITERIA A firm with a 14% VVACC is evaluating two projects for this year’s capital budget. After-tax cash flows, including depreciation, are as follows:

Chapter 11, Problem 7P, CAPITAL BUDGETING CRITERIA A firm with a 14% VVACC is evaluating two projects for this years capital

  1. a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project.
  2. b. Assuming the projects are independent, which one(s) would you recommend?
  3. c. If the projects are mutually exclusive, which would you recommend?
  4. d. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

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