A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow: $\begin{array}{crrrrr}
\text { Year } & {\mathrm{A}} & {\mathrm{B}} & \mathrm{C} & {\mathrm{D}} \
1 & \$ 10,000 & \$ 50,000 & \$ 25,000 & \$ 0 \
2 & 20,000 & 40,000 & 25,000 & \$ 0 \
3 & 30,000 & 30,000 & 25,000 & 45,000 \
4 & 40,000 & 0 & 25,000 & 55,000 \
5 & 50,000 & 0 & 25,000 & 60,000
\end{array}$ Evaluate and rank each alternative based on a) payback period, b) net present value (use a 10% discount rate), and c) internal rate of return. For the internal rate of return, please use Excel's "IRR" function as described in the text.

Question

A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow: $\begin{array}{crrrrr}
\text { Year } & {\mathrm{A}} & {\mathrm{B}} & \mathrm{C} & {\mathrm{D}} \
1 & \$ 10,000 & \$ 50,000 & \$ 25,000 & \$  0 \
2 & 20,000 & 40,000 & 25,000 & \$ 0 \
3 & 30,000 & 30,000 & 25,000 & 45,000 \
4 & 40,000 & 0 & 25,000 & 55,000 \
5 & 50,000 & 0 & 25,000 &  60,000
\end{array}$ Evaluate and rank each alternative based on a) payback period, b) net present value (use a 10% discount rate), and c) internal rate of return. For the internal rate of return, please use Excel's "IRR" function as described in the text.

Quizplus · Accepted Answer

The Answer of A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow: $\begin{array}{crrrrr}
\text { Year } & {\mathrm{A}} & {\mathrm{B}} & \mathrm{C} & {\mathrm{D}} \
1 & \$ 10,000 & \$ 50,000 & \$ 25,000 & \$  0 \
2 & 20,000 & 40,000 & 25,000 & \$ 0 \
3 & 30,000 & 30,000 & 25,000 & 45,000 \
4 & 40,000 & 0 & 25,000 & 55,000 \
5 & 50,000 & 0 & 25,000 &  60,000
\end{array}$ Evaluate and rank each alternative based on a) payback period, b) net present value (use a 10% discount rate), and c) internal rate of return. For the internal rate of return, please use Excel's "IRR" function as described in the text.

A&B Enterprises Is Trying to Select the Best Investment from Among