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  • Capital Budgeting

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    rajakosuri429
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    The document outlines calculations for internal rate of return, net present value, modified internal rate of return, and payback period for two projects, Project A and Project B. Based on the IRR, NPV, and MIRR calculations, Project A should be selected as it has higher returns than Project B. However, based on payback period, Project B should be selected as it has a shorter payback period than Project A.

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    Capital budgeting

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    The document outlines calculations for internal rate of return, net present value, modified internal rate of return, and payback period for two projects, Project A and Project B. Based on the IRR, NPV, and MIRR calculations, Project A should be selected as it has higher returns than Project B. However, based on payback period, Project B should be selected as it has a shorter payback period than Project A.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    17 views5 pages

    Capital Budgeting

    Uploaded by

    rajakosuri429
    The document outlines calculations for internal rate of return, net present value, modified internal rate of return, and payback period for two projects, Project A and Project B. Based on the IRR, NPV, and MIRR calculations, Project A should be selected as it has higher returns than Project B. However, based on payback period, Project B should be selected as it has a shorter payback period than Project A.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 5

    1.

    Calculate the internal rate of return (IRR) as follows:

    2.

    Calculate the net present value (NPV) for both projects as follows:
    3.

    Calculate the modified internal rate of return (MIRR) as follows:


    4.

    Calculate the payback period (PBP) for Project B as follows:


    Decision:

    As per IRR: Project A should be selected as the internal rate of return is higher than the
    weighted average cost of capital and project B' IRR.

    As per NPV: Project A should be selected as the Net Present Value is higher than the project
    B' NPV.

    As per MIRR: Project A should be selected as the internal rate of return is higher than the
    weighted average cost of capital and project B' MIRR.

    As per PBP: Project B should be selected as the Project A's payback period is higher than the
    project B.

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