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Financial Evaluation of Projects (in $):Project A:Initial Cost: $18,000Year 1: $3,000Year 2: $4,000Year 3: $5,000Year...

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Accounting

Financial Evaluation of Projects (in $):
  • Project A:
    • Initial Cost: $18,000
    • Year 1: $3,000
    • Year 2: $4,000
    • Year 3: $5,000
    • Year 4: $6,000
    • Year 5: $8,000
  • Project B:
    • Initial Cost: $15,000
    • Year 1: $2,000
    • Year 2: $3,500
    • Year 3: $4,500
    • Year 4: $5,000
    • Year 5: $7,000

Required:

  1. Calculate the payback period for both projects.
  2. Determine which project to choose if the standard payback period is 4 years.
  3. Compute the NPV at a discount rate of 9%.
  4. Calculate the IRR for each project.
  5. Assess the modified internal rate of return (MIRR) for both projects assuming a finance rate of 9% and a reinvestment rate of 10%.

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