ASAP!! IN 20 minnsM/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:periodCash Flow ofProject AProject B0-90,000-150,000130,00072,000230,00035,000350,00040,000430,00025,000 Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively. Which project(s) should be accepted if: (i) The projects are mutually exclusive and there is no capital constraint.(ii) The projects are independent and there is no capital constraint.(iii) The projects are independent and there is a total of $100,000 of financing for capital outlays in the coming period.Why the cost of capital for A might be higher than for B. State possible reason(s)

Introduction 1. Discounted payback period Discounted payback period is the period when the…

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 14P

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ASAP!! IN 20 minns

M/s Sons & Sons is considering two projects, A & B, with cash flows as shown below:

period	Cash Flow of
Project A	Project B
0	-90,000	-150,000
1	30,000	72,000
2	30,000	35,000
3	50,000	40,000
4	30,000	25,000

Calculate discounted payback period, net present value and internal rate of return for each project using opportunity cost of capital 13 % & 9% for project A & B respectively.
Which project(s) should be accepted if:

(i) The projects are mutually exclusive and there is no capital constraint.

(ii) The projects are independent and there is no capital constraint.

(iii) The projects are independent and there is a total of $100,000 of financing for capital outlays in the coming period.

Why the cost of capital for A might be higher than for B. State possible reason(s)

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