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Problem 10-21 Payback, NPV, and MIRR Your division is considering

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Problem 10-21
Payback, NPV, and MIRR
Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 9% and that the investments will produce the following after-tax cash flows (in millions of dollars):
Year Project A Project B
1 5 20
2 10 10
3 15 8
4 20 6
What is the regular payback period for each of the projects? Round your answers to two decimal places.

Project A years

Project B years


What is the discounted payback period for each of the projects? Round your answers to two decimal places.

Project A years

Project B years


If the two projects are independent and the cost of capital is 9%, which project or projects should the firm undertake?



If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake?



If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake?



What is the crossover rate? Round your answer to two decimal places.
%


If the cost of capital is 9%, what is the modified IRR (MIRR) of each project? Round your answers to two decimal places.

Project A %

Project B %

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Customer: replied 3 years ago.

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Customer: replied 3 years ago.

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