Describe the logic behind net present value

Reference no: EM13297942

Provide an explainationof the two projects both with 5 year expected lives and indentical initial outlays of 110000. The required rate of return on both the project is 12%.

Project A Project B

Initial outlay -110000 -110000

year 1 20000 40000
year 2 30000 40000
year 3 40000 40000
year 4 50000 40000
year 5 70000 40000

Questions: 1. What is the payback period on each project? I the company imposes a 3 year maximum acceptable payback period, which of these projects should be accepted?

Question 2: Determine the net present value of each oth project?

Question 3: Describe the logic behind net present value?

Question 4:Determine the modified internal rate of return for each project. Should they be accepted. Do you feel it is better evaluation technique than the internal rate of return? Why or why not?

Reference no: EM13297942

Questions Cloud

The ftc will use to protect consumer privacy : Describe the five main action items that the FTC will use to protect consumer privacy.

Find the translational rms speed of sulfur dioxide molecules : The pressure of sulfur dioxide (SO2) is 2.89 x 104 Pa. Find the translational rms speed of the sulfur dioxide molecules

Identify industry drivers for change : Summarize industry changes over the past five years and

Determine the kelvin temperature of the gas : A container holds 1.9 mol of gas. The total average kinetic energy of the gas molecules in the container is equal to the kinetic energy of a 7.7x10-3 kg bullet with a speed of 630 m/s

Describe the logic behind net present value : Determine the modified internal rate of return for each project. Should they be accepted. Do you feel it is better evaluation technique than the internal rate of return? Why or why not?

Final marketing plan : Final Marketing Plan

Calculate the vertical stress at every combination of depth : A circular plate is loaded with a total load of 60 kips distributed uniformly over the surface at a pressure of 100 psi. Calculate the vertical stress at every combination of the following: (a) Depth: 12 and 50 (b) Radial distance from the center ..

How is preferred stock similar to bonds : investors can sue the firm if preferred dividend payments are not paid much like bondholders can sue for non-payments of interest.

Explain the expression for q and general thermodynamic : For gases, the canonical partition function, Q, is related to the molecular partition function q by Q = q^N/N!. Use the expression for q and general thermodynamic relations to derive the perfect gas law pV = nRT.

User Account

All Pages