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Newfoundland Vintners Co-operative is considering two mutually exclusive projects: Absinth and ...

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Newfoundland Vintners Co-operative is considering two mutually exclusive projects: Absinth and ...

Newfoundland Vintners Co-operative is considering two mutually exclusive projects: Absinth and Brandy. The following information is provided for the two projects.

	Absinth	Brandy
Initial cash outlay	$20,000	$30,000
After-tax cash flows
Year 1	$11,000	$7,000
Year 2	$8,500	$9,000
Year 3	$7,500	$11,000
Year 4		$16,000

Neither project can be repeated at the end of its life. The appropriate discount rate for both projects is 10%.

a) Calculate the NPV of both projects.
b) Calculate the IRR of both projects.
c) Calculate the payback periods of both projects.
d) Calculate the discounted payback periods of both projects.
e) Calculate the profitability index of both projects.
f) Which project should the firm choose using the information in (A) - (E)? Why?

Textbook

Corporate Finance

Edition: 5^th

Author: Booth

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drw92 Author

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Correct

paulinaibarra98

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I appreciate what you did here, answered it right Smiling Face with Open Mouth

GeorgeNeist

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Just got PERFECT on my quiz

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