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  • Class Quiz Capital Budgeting Techniques

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    HibaAli
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    This document discusses two potential projects for Nicholson Roofing Materials, each requiring an initial investment of $150,000. The company's board has set a 4-year maximum payback period and a 9% cost of capital. The document asks to calculate the payback period, net present value at 15%, and internal rate of return for each project, then rank and recommend one based on these analyses.

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    Class Quiz capital budgeting techniques

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    This document discusses two potential projects for Nicholson Roofing Materials, each requiring an initial investment of $150,000. The company's board has set a 4-year maximum payback period and a 9% cost of capital. The document asks to calculate the payback period, net present value at 15%, and internal rate of return for each project, then rank and recommend one based on these analyses.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    96 views1 page

    Class Quiz Capital Budgeting Techniques

    Uploaded by

    HibaAli
    This document discusses two potential projects for Nicholson Roofing Materials, each requiring an initial investment of $150,000. The company's board has set a 4-year maximum payback period and a 9% cost of capital. The document asks to calculate the payback period, net present value at 15%, and internal rate of return for each project, then rank and recommend one based on these analyses.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    Q1. Nicholson Roofing Materials, Inc.

    , is considering two mutually exclusive


    projects, each with an initial investment of $150,000. The company’s board of
    directors has set a 4-year payback requirement and has set its cost of capital at 9%.
    The cash inflows associated with the two projects are as follows:

    a. Calculate the payback period for each project. /5


    b. Calculate the NPV of each project at 15%. /6
    c. Derive the IRR of each project. /6
    d. Rank the projects by each of the techniques used. Make and justify a
    recommendation. /3

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