· c. Rank the presses from best to worst using NPV.
· d. Calculate the profitability index( PI) for each press.
· e. Rank the presses from best to worst using PI.
P10 – 14 Internal rate of return For each of the projects shown in the following table, calculate the internal rate of return( IRR). Then indicate, for each project, the maximum cost of capital that the firm could have and still find the IRR acceptable.
Project A |
Project B |
Project C |
Project |
D |
|
|
|
Initial investment( CF0) |
$ 90,000 |
$ 490,000 |
$ 20,000 |
$ 240,000 |
Year( t) |
Cash inflows( CFt) |
1 $ 20,000 $ 150,000 $ 7,500 $ 120,000
2 25,000 150,000 7,500 100,000
3 30,000 150,000 7,500 80,000
4 35,000 150,000 7,500 60,000
5 40,000— 7,500—
P10 – 21 All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, each with an initial investment of $ 150,000. The company’ s board of directors has set a maximum 4-year payback requirement and has set