Homework answers / question archive / Year                 Project A         Project B         Project C         Project D          0                      -$4,000,000     -$8,000,000     -$6,000,000     -$3,000,000 1                      $1,000,000      $1,250,000      $1,500,000      $300,000 2                      $1,000,000      $1,250,000      $1,500,000      $500,000 3                      $1,000,000      $1,250,000      $2,500,000      $500,000          4                      $1,000,000      $1,250,000      $2,500,000      $750,000 5                      $800,00                       $1,250,000                              $750,000 6                      $0                    $1,250,000                              $750,000 7                      $800,000         $1,250,000                              $750,000 8                      $300,000         $1,250,000                              $750,000 9                                              $1,250,000                              $750,000 10                                            $1,250,000                              $750,000   Req rate of return is as below for Project A, B, C and D respectively

Year                 Project A         Project B         Project C         Project D          0                      -$4,000,000     -$8,000,000     -$6,000,000     -$3,000,000 1                      $1,000,000      $1,250,000      $1,500,000      $300,000 2                      $1,000,000      $1,250,000      $1,500,000      $500,000 3                      $1,000,000      $1,250,000      $2,500,000      $500,000          4                      $1,000,000      $1,250,000      $2,500,000      $750,000 5                      $800,00                       $1,250,000                              $750,000 6                      $0                    $1,250,000                              $750,000 7                      $800,000         $1,250,000                              $750,000 8                      $300,000         $1,250,000                              $750,000 9                                              $1,250,000                              $750,000 10                                            $1,250,000                              $750,000   Req rate of return is as below for Project A, B, C and D respectively

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Year                 Project A         Project B         Project C         Project D         

0                      -$4,000,000     -$8,000,000     -$6,000,000     -$3,000,000

1                      $1,000,000      $1,250,000      $1,500,000      $300,000

2                      $1,000,000      $1,250,000      $1,500,000      $500,000

3                      $1,000,000      $1,250,000      $2,500,000      $500,000         

4                      $1,000,000      $1,250,000      $2,500,000      $750,000

5                      $800,00                       $1,250,000                              $750,000

6                      $0                    $1,250,000                              $750,000

7                      $800,000         $1,250,000                              $750,000

8                      $300,000         $1,250,000                              $750,000

9                                              $1,250,000                              $750,000

10                                            $1,250,000                              $750,000

 

Req rate of return is as below for Project A, B, C and D respectively.

A=11.58%

B=8.48%

C=10.03%

D=13.90%

 

For each project, calculate the NPV, IRR, profitability index (PI) and the payback period. For each capital budgeting decision tool, indicate if the project should be accepted or rejected, assuming that each project is independent of the others. Important Note: All projects must be completed within 6 years or less