1. Consider the projects below: (15 points) Project 2. 1 2 Cost Cash Flow 0 Project ($200,000) ($250,000 $500,000 Used B

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1 Consider The Projects Below 15 Points Project 2 1 2 Cost Cash Flow 0 Project 200 000 250 000 500 000 Used B 1 (50.56 KiB) Viewed 12 times

1. Consider the projects below: (15 points) Project 2. 1 2 Cost Cash Flow 0 Project ($200,000) ($250,000 $500,000 Used Book Store Clothing Store Estimate the IRR for each project (12 points), what project should you choose if cost of capital is 7% (3 points)? A $80 $25 1 Projects A, B, and C each have an expected life of five years. Given the initial cost and annual cash flow information below, what is the payback period for each project? (9 points) What are the disadvantages for payback methods (6 points). Initial Investment $250,000 $50,000 $75,000 $675,000 ($225,000) ($300,000) ($200,000) $500,000 2 B $120 $30 3. You have researched several possibilities and come up with the following cash flow estimates (including the cost of purchasing the property) for two investments. Which investment should you choose if you only can pick one? Show your work. (10 points) 3 First-Year Cash Flow $55,000 $125,000 ($250,000) ($100,000) C $125,000 $150 $35 Growth Rate 4% 8% Cost of Capital 7% 12%