Assignment Module 5 Homework Asspnen Score 000 Save Submit A

Assignment: Module 5 Homework Asspnen Score 0.00% Save Submit Assignment for Grading Question 16 of 20 Questions Problem 11.11 14. 15 O 16 Check My Work (3 remaining) o Click here to read the eBook: Net Present Value (NPV) CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S costs $11,000 and its expected cash flows would be $6,500 per year for 5 years. 18 O Mutually exclusive Project L costs $48,000 and its expected cash flows would be $12,400 0 per year for 5 years. If both projects have a WACC of 13%, which project would you 19. Select the correct answer. ?aNether Projct S nor L, since each projects NPV ?. ?.Projet L, since the NPL > NPVS- d. Project S, since the NPVs > NPVL e.Both Projects S and L, since both projects have IRR\'s > 0. Check My Work (3 remaining) 2 4

Solution

Answer : \"d. Project S, since the NPV(S) >NPV(L)\" => NPV PROJ S = CASH INFLOW * PVIFA(COST%,N) - INITIAL CASH OUTFLOW NPV PROJ S = 6500 * PVIFA(13%,5) - 11000 6500*3.517 - 11000 = 11860.50 NPV PROJ L = 12400 * PVIFA(13%,5) - 48000 12400*3.517 - 48000 = -4389.20