As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive...
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As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive projects. Project X is a three year project and project Z is a four year project. The project net cash flows are followed: Project X Project z Year Cash Flow -$200, 000 70,000 120,000 140,000 -$300,000 50,000 80,000 100,000 270,000 Denver's cost of capital is 15 percent. .What is project Z's payback period? If the cut off period for the company is 3 years, will you accept project X? . What is project X's discounted payback period? If the cut off period for the company is 3 years, will you accept project Z? 3. What is each project's NPV? Which project would you choose based on NPV rule? 4. What is each project's IRR? Which project would you choose based on IRR rule? S. Why IRR rule and NPV rule lead to different decisions? Which rule is more appropriate to evaluate mutually exclusive projects? Why
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