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The director of capital budgeting for a firm has identified two mutually exclusive projects, A and B, with the following expected net cash flows:
Expected Net Cash Flows Year Project A Project B 0 ($100) ($100) 1 70 10 2 50 60 3 20 80
Both of the projects have a cost of capital of 14 percent.
(i) What is the regular payback period (in years) for Project B?
Regular (non-discounted) Payback Period for B = ____________________.
(ii) What is Project A's net present value (NPV)?
NPV for A = ____________________.
(iii) What is the profitability index (PI) for Project B?
Profitability Index for B = ____________________.
(iv) What is the modified internal rate of return for Project A?
MIRR for Project A = ____________________.
LOMBARD COMPANY
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