Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the projects ability to earn the company additional compensation. The 3 main tools used to make this evaluation are the pay-ba
March 19th, 2023
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Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the projects ability to earn the company additional compensation. The 3 main tools used to make this evaluation are the pay-ba
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Strategic decision makers are required to be able to evaluate projects based on the long-term objectives of the firm as well as the projects ability to earn the company additional compensation. The 3 main tools used to make this evaluation are the pay-back period, net present value (NPV), and internal rate of return (IRR).
Using the data in the tables attached, answer the following questions:
- Calculate the NPV for each project using each scenario’s NPV rate. Show your work.
- Calculate the pay-back period for each project. Show your work.
- Calculate the IRR for each project. Show your work.
- Which project would the company select using the NPV method in scenario 1? Explain your answer.
- Which project would the company select using the NPV method in scenario 2? Explain your answer.
- Which project would the company select using the NPV method in scenario 3? Explain your answer.
- Which project would the company select using the pay-back period? Explain your answer.
- Which project would the company select using the IRR method? Explain your answer.