Question

A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 1 1 2 3 4 5 Project M Project N -$27,000 $9,000 $9,000 $9,000 $9,000 $9,000 $81,000 $25,200 $25,200 $25,200 $25,200 $25,200 a. Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent. Project M: $ Project N: $ Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: Project N: Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: % Project N: Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: years Project N: years

Answer 1

Year M N Year M 0 $ (27,000.00) $(81,000.00) O 1-27000 1-81000 1 $ 9,000.00 $ 25,200.00 1 9000 25200 2 $ 9,000.00 $ 25,200.00 9000 25200 3 $ 9,000.00 $ 25,200.00 9000 25200 4 $ 9,000.00 $ 25,200.00 9000 25200 5 $ 9,000.00 $ 25,200.00 5 9000 25200 NPV $3,897.73 $5,513.64 || NPV =NPV(14%,B3:37)+B2I=NPV(14%,C3:C7)+C2 IRR 19.9% 16.8% IRR =IRR(B2:B7) =IRR(C2:C7) MIRR 17.12% 15.51% MIRR =MIRR(B2:37,14%,14%) =MIRR(C2:07,14%,14%) Payback 3.00 3.21 Payback =27000/9000 =81000/25200 |-|NM||4223