Pbp, npv, pi, irr, mirr of projects m and o

QUESTION :

 

The Sanders Electric Company is evaluating two 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 as follows for the two

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 and PI for each project based on a 10

percent cost of capital. Which, if either, of the projects is

acceptable?

c. Determine the IRR and MIRR for Projects M and O.

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