Home / Questions / Problem 5 18 Comparing Investment Criteria Consider the following cash flows of two mutual...
Problem 5-18 Comparing Investment Criteria
|
Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for Tokyo Rubber Company is 10 percent. |
| Year | Dry Prepreg | Solvent Prepreg | ||||
| 0 | Ac€?o$ | 1,730,000 | Ac€?o$ | 765,000 | ||
| 1 | 1,103,000 | 390,000 | ||||
| 2 | 906,000 | 630,000 | ||||
| 3 | 753,000 | 396,000 | ||||
| a. |
What is the payback period for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
| Payback period | ||
| Dry Prepeg | years | |
| Solvent Prepeg | years | |
| b. |
What is the NPV for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
| NPV | ||
| Dry Prepeg | $ | |
| Solvent Prepeg | $ | |
| c. |
What is the IRR for both projects? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
| IRR | ||
| Dry Prepeg | % | |
| Solvent Prepeg | % | |
| d. |
Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
| Incremental IRR | % |
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