Caledonia

As Caledonia is considering two additional mutually exclusive projects, for calendar weeks four assignment, Team D depart originate answers to determine what between attend A and find out B all(prenominal) projects payback stop consonant, net deport value, and internal rate of return. In addition, the team will show an analysis of what caused the ranking conflict and which project should be original and why. With a final comment, the team will describe factors Caledonia must(prenominal) consider if they were doing a lease versus buy. Cash flows associated with these projects RRR = 11% yearPROJECT APROJECT B11% 0($100,000)($100,000) 132,000 232,0000 332,0000 432,0000 532,000$200,000 NPV $18,269$18,690 Required rate of return on these projects is 11 percent a.What is each projects payback period? Year watch AProject B acquaint Value (PV) @ 11%Project AProject B 0-100,000-100,0001-100000-100,000 132,00000.90288280 232,00000.81259710 332,00000.73233980 432,00000.66210790 532,000200,0000.5918990118690 Project a 100000/32,000=3.125 years Project b 100,000/200,000=0.5 There was no exchange flow for the first 4 years 4+0.5=4.5 years Project As payback period is 3.125 years whereas Project B is 4.5 years.

b.What is each projects net relegate value? The NPV for Project A is $18,269, whereas the NPV for Project B is $18,690 c.What is each projects internal rate of return? Project A 100,000 + IRR = 18.03% Project B 100,000 + 200,000 IRR = 14.87% d.What has caused the ranking conflict? The ranging conflict comes from the timeline of the two projects. over the course of five years project B will make more money than project A. However, project A will begin eyesight payback on the investing much faster than project B. Allowing the musical arrangement to begin seeing a return on their money sooner allows the organization to invest in other areas and... If you want to get a full essay, order it on our website: Orderessay

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