Jade is CEO of InvestCo, a financial advisory firm for the wealthy. Her firm’s WACC is 10.00%. Her firm is investigating two projects, and they have asked you to determine which one to pursue. Project D requires an initial investment of $112,000, while project E requires an up-front investment of $98,000. Given the cashflows for each project listed below, answer the following questions. (important: make sure to place negative sign (-) in front of any negative cash flow.)
A.) what is the NPV of the project that has the highest NPV?
B.) what is the IRR of the project that has the highest IRR?
C.) What is the Profitability Index of the Project that has the highest Profitability Index?
Year Project D Project E
1 39,400 37,900
2 54,600 51,800
3 46,200 32,400
For NPV: write dollar amounts out to the penny with no dollar sign. Make sure you show negative sign (-) to indicate negative NPV. For IRR: interest rates should be entered as follows: 11.28. Profitability Index should be shown as follows: 1.08 or 0.88 (whichever is appropriate for your problem).
For this problem:
Highest NPV=
Highest IRR=
Highest Profitability Index=
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