Question: A firm with a 14% WACC is estimating two projects for this year's capital budget. After tax cash flows, including depreciation, are as follows
|
|
0
|
1
|
2
|
3
|
4
|
5
|
|
Project A
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-$6,000
|
$2,000
|
$2,000
|
$2,000
|
$2,000
|
$2,000
|
|
Project B
|
-$18,000
|
$5,600
|
$5,600
|
$5,600
|
$5,600
|
$5,600
|
[A] Compute NPV, IRR, MIRR, payback, & discounted payback for each project.
[B] Suppose the projects are independent, which one or ones would you recommend?
[C] If the projects are mutually exclusive, determine which would you recommend?