Payback, NPV, and MIRR
Your division is considering two investment projects, each ofwhich requires an up-front expenditure of $23 million. You estimatethat the cost of capital is 9% and that the investments willproduce the following after-tax cash flows (in millions ofdollars):
| Year | Project A | Project B |
| 1 | 5 | 20 |
| 2 | 10 | 10 |
| 3 | 15 | 8 |
| 4 | 20 | 6 |
What is the regular payback period for each of the projects?Round your answers to two decimal places.
Project A years
Project B years
What is the discounted payback period for each of the projects?Round your answers to two decimal places.
Project A years
Project B years
If the two projects are independent and the cost of capital is9%, which project or projects should the firm undertake?
-Select-Project AProject BBoth projectsItem 5
If the two projects are mutually exclusive and the cost ofcapital is 5%, which project should the firm undertake?
-Select-Project AProject BItem 6
If the two projects are mutually exclusive and the cost ofcapital is 15%, which project should the firm undertake?
-Select-Project AProject BItem 7
What is the crossover rate? Round your answer to two decimalplaces.
%
If the cost of capital is 9%, what is the modified IRR (MIRR) ofeach project? Round your answers to two decimal places.
Project A %
Project B %
