Answer to Question #148981 in Finance for Priyal

Question #148981
ABC Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows:

NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: Corporate Finance
Internal Assignment Applicable for December 2020 Examination
Expected Cash Flows
Year Project A Project B
0 -375 -575
1 -300 190
2 -200 190
3 -100 190
4 600 190
5 600
6 926
7 -200
190 190 0
If you were told that each project’s cost of capital was 12%, which project should be selected using the NPV criteria? What is each project’s IRR? What is the regular payback period for these two projects? What is the profitability index for each project if the cost of capital is 12%?
1
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2020-12-06T17:47:57-0500

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