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ncastel · #1 Feb 23, 2008, 04:27 PM

I need help figuring out this problem.
(NPV, PI, IRR Calculations) considering two independent projects, project A and project B. The initial cash outlay associated with Project A is $50,000, and Project B is $70000. The required rate of return on both projects is 12%. The expected annual free cash flows from each project are as follows:
Year------- Project A ----- Project B
0 -------- -50000 ----- -70000
1 -------- 12000 ----- 13000
2 ------- 12000 ----- 13000
3 ------- 12000 ----- 13000
4 ------- 12000 ----- 13000
5------ 12000 ----- 13000
6 ------ 12000 ----- 13000
I am to calculate the NPV and the IRR Only for each project and indicate if the project should be accepted. Can someone please help me with this problem? I don't know the formulas so it is hard for me to get a start on this. Thanks



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