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The Sanders Electric Company is evaluating 2 projects for possible inclusion in the firm's capital budget. Project M will require a $37,000 investment while project O"s investment will be $46,000. After-tax cash inflows are estimated follows for the 2 projects:

year project M project O

1 $12,000 $10,000
2 $12,000 $10,000
3 $12,000 $15,000
4 $12,000 $15,000
5 $15,000

a. Determine the payback period for each project.
b. Calculate the NPV & profitability index for each project based on a 10% cost of capital. Which, if either, of the projects is acceptable?
c. Determine the IRR & MIRR for projects M & O.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9862035

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