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Finance problem 4-7 - Gardial Fisheries

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Question;Questions 4-7 are based on the following example:Gardial Fisheries is considering two mutually exclusive investments. The forecasted cash flows for each project is as follows:Year Project A ($) Project B ($)0 -375 -5751 -300 1902 -200 1903 -100 1904 600 1905 600 1906 926 1907 -200 04. If each project has a cost of capital of 12%, what is the NPV for each project? Based on this, which project would you select?5. If each project has a cost of capital of 17%, what is the NPV for each project? Based on this, which project would you select?6. What is the IRR, for each project? Based on the IRR, which project should be selected?7. If there is a conflict between your decision using the NPV method and your decision using the IRR method, which method takes precedence? Why?

 

Paper#49211 | Written in 18-Jul-2015

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