Project , A B ,Initial Investment ($11,000) ($17,000) ,Duration of Project 6 years 6 years ,Cash flow per year $4,000 $6,000 ,Required Rate of Return 15% 15% ,NPV $4,138 $5,707 ,IRR 28.16% 26.80% ,Terminal value $35,014.95 $39,391.82 ,MIRR 17.77% 17.18% ,Discounted Payback 3.82 3.96 , ,a) If these projects are mutually exclusive, explain which one would you pick. First must explain the method you would use. ,b) Discuss the relative Advantages and disadvantages of all the methods. ,c) What can you deduce about the reinvestment rate vs. the finance rate from the MIRR? Is the reinvest rate higher or lower than the finance rate? Explain. ,d) If these projects are independent, explain which one(s) would you pick (you could pick both). ,2) ,a) It is stated that the value of any asset is simply the present value of future cash flows. Explain this more fully, citing the chapters and specific instances where this concept is applied. ,b) What factors impact the value of the business? ,c) What are the sources of value for a business? , ,
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