Martin Medical expects Alpha Project and Beta Project to generate the following:
|
Alpha Project 1 (in thousands) |
Years |
0 |
1 |
2 |
3 |
4 |
5 |
|
Givens |
|||||||
|
Initial investment |
($16,000) |
||||||
|
Net operating cash flows |
($8,000) |
$5,000 |
$10,000 |
$14,000 |
$24,000 |
||
|
Beta Project 2 (in thousands) |
|||||||
|
Givens |
|||||||
|
Initial investment |
($24,000) |
||||||
|
Net operating cash flows |
$(6,000) |
$6,000 |
$6,000 |
$6,000 |
$6,000 |
a. Determine the payback for both projects.
b. Determine the IRR.
c. Determine the NPV at a cost of capital of 14 percent.