Compute npv-irr and dpb for both projects

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Reference no: EM131530255

Consider two mutually exclusive projects, A and B, whose costs and cash flows are shown in the following table:

Year Project A Project B

1 $(15,000) $(22,840)

2 9,000 8,000

3 8,000 8,000

4 2,500 8,000

5 3,000 8,000

a. Calculate the cross over rate. Show your work and use Excel to find your answer.

b. Compute NPV, IRR, and DPB for both projects. Show your work and use Excel to find your answer.

c. Which project will be accepted. Why?

(cost of capital = 12 percent.)

Reference no: EM131530255

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