Project Project

year
L S
0 (100.00) (100.00)
1 10 70
2 60 50
3 80 20

1) Required rate of return 0.1

Project Project Balance Balance

year
L S L S
0 (100.00) (100.00) (100.00) (100.00)
1 10 70 (90.00) (30.00)
2 60 50 (30.00) 20
3 80 20 50 40
PB 2.375 1.6

Project Balance Project Balance

year PV CF L PV CF S
L L S S
0 (100.00) $0.00 (100.00) (100.00) $0.00 (100.00)
1 10 ($9.09) ($90.91) 70 ($63.64) ($36.36)
2 60 ($49.59) ($41.32) 50 ($41.32) $4.96
3 80 ($60.11) $18.78 20 ($15.03) $19.98

DPB 2.6875 1.88

2) NPV $18.78 $19.98

*) If projects are independent both project should be accepted as the both

have posivive NPV
*) If projects are mutually exclusive, project S should be accepted as it has
higher NPV
23.56%
23.56%
IRR 18.13% 23.56%
*)