Net Cash Flows and NPVs for different discount rate for projects S and L are given below

Net Cash Flows ($) 

Discount Rate (%) 
NPV_{S} 
NPV_{L} 

Year (t) 
Project S 
Project L 

0% 
$800 
$1100 
0 
$(3000) 
$(3000) 

5 

554.32 
1 
1500 
400 

10 
161.33 

2 
1200 
900 

15 
(90.74) 
(259.24) 
3 
800 
1300 

20 
(309.03) 
(565.97) 
4 
300 
1500 





Net Cash Flows ($) 

Discount Rate (%) 
NPV_{S} 
NPV_{L} 

Year (t) 
Project S 
Project L 

0% 
$800 
$1100 
0 
$(3000) 
$(3000) 

5 

554.32 
1 
1500 
400 

10 
161.33 

2 
1200 
900 

15 
(90.74) 
(259.24) 
3 
800 
1300 

20 
(309.03) 
(565.97) 
4 
300 
1500 




a) Calculate the payback period in years for the Project S and Project L
i) Payback for Project S:
ii) Payback for Project L:
c) Calculate NPV_{S }for 5% and NPV_{L }for 10%. Fill the table
i) NPV_{S} at 5%:
ii) NPV_{S} at 10%:
d) What is the IRR for S? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR
Equation:
Answer:
e) What is the IRR for S? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR
Equation:
Answer:
f) What is the crossover rate? (Write down the equation for IRR and then Use an excel worksheet to calculate IRR
Equation:
Answer:
g) If projects are mutually exclusive, which project would you accept?
i) at 5%
ii) at 15%
h) If projects are independent (not mutually exclusive), which project(s) would you accept?
i) at 5%
ii) at 15%
Net Cash Flows and NPVs for different discount rate for projects S and L are given below

Net Cash Flows ($) 

Discount Rate (%) 
NPV_{S} 
NPV_{L} 

Year (t) 
Project S 
Project L 

0% 
$800 
$1100 
0 
$(3000) 
$(3000) 

5 

554.32 
1 
1500 
400 

10 
161.33 

2 
1200 
900 

15 
(90.74) 
(259.24) 
3 
800 
1300 

20 
(309.03) 
(565.97) 
4 
300 
1500 




Equation:
Answer:
Net Cash Flows and NPVs for different discount rate for projects S and L are given below

Net Cash Flows ($) 

Discount Rate (%) 
NPV_{S} 
NPV_{L} 

Year (t) 
Project S 
Project L 

0% 
$800 
$1100 
0 
$(3000) 
$(3000) 

5 

554.32 
1 
1500 
400 

10 
161.33 

2 
1200 
900 

15 
(90.74) 
(259.24) 
3 
800 
1300 

20 
(309.03) 
(565.97) 
4 
300 
1500 




Equation:
Answer:
Equation:
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