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Your task is to analyze two mutually exclusive projects:

Year Cash Flow Project X Cash Flow Project Z

-0- -400,000 -50,000

1 25,000 20,000

2 60,000 15,000

3 60,000 20,000

4 540,000 20,000

Whichever project you chose, if any, you require a 15% return on your investment.

A] Using the payback criterion, which investment should you chose? Why?

B] Using the discounted payback criterion, which investment should you chose? Why?

C] Using the NPV criterion, which investment should you chose? Why?

D] Using the IRR criterion, which investment should you chose? Why?

E] Using the profitability index criterion, which investment should you chose? Why?

F] Based on your analysis in (A) thru (E), which investment should you finally chose? Why?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91379773

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