All techniques with NPV profile—Mutually exclusive projects Custom Essay

P10-24 All techniques with NPV profile—Mutually restricted plans: Plans A and B, of resembling surrender, are alternatives control expanding Rosa Company’s cleverness. The firm’s absorb of principal is 13%. The specie flows control each plan are shown in the subjoined consideration.

a. Calculate each plan’s payback end.

b. Calculate the intrap bestow compute (NPV) control each plan.

c. Calculate the interior trounce of revert (IRR) control each plan.

d. Draw the intrap bestow compute profiles control twain plans on the corresponding fixed of axes, and sift-canvass any contest in ranking that may depend among NPV and IRR.

e. Summarize the preferences dictated by each estimate, and manifest which plan you would applaud. Explain why.

Initial investment (CF0)

Plan A

Plan B

$80,000

$50,000

Year (t)

Specie inflows (CFt)

1

$15,000

$15,000

2

20,000

15,000

3

25,000

15,000

4

30,000

15,000

5

35,000

15,000

 

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