M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:Cash Flow ofperiodProject AProject B-90,000-150,000130,00072,000230,00035,000330,00040,000430,00025,000a. Calculate discounted payback period, net present value and intemal rate of retum for each projectusing opportunity cost of capital 13 % & 9% for project A & B respectively.b. Which project(s) should be accepted if:The projects are mutually exclusive and there is no capital constraint.The projects are independent and there is no capital constraint.The projects are independent and there is a total of $100,000 of financing for capitaloutlays in the coming period.(ii)c. Why the cost of capital for A might be higher than for B. State possible reason(s)

Project A @13%- Discounted Payback Period- 4.034 years Year Cash Flow Net Cash Flow Discounted…

M/s Sons & Sons is considering two projects, A &B, with cash flows as shown below: Cash Flow of period Project A Project B -90,000 30,000 30,000 -150,000 1 72,000 35,000 3 30,000 40,000 25,000 4 30,000 a. Calculate discounted payback period, net present value and intermal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.

M/s Sons & Sons is considering two projects, A &B, with cash flows as shown below: Cash Flow of period Project A Project B -90,000 30,000 30,000 -150,000 1 72,000 35,000 3 30,000 40,000 25,000 4 30,000 a. Calculate discounted payback period, net present value and intermal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 13P

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