# Which project(s) to accept based on the cash flow forecasts

**katrix**

Task:

Senior management asks you to recommend a decision on which project(s) to accept based on the cash flow forecasts provided.

Relevant information:

1. The firm uses a 3-year cutoff when using the payback method.

2. The hurdle rate used to evaluate capital budgeting projects is 15%.

The cash flows for projects A, B and C are provided in attachment below.

1. Assume the projects are independent and answer the following:

--Calculate the payback period for each project.

--Which project(s) would you accept based on the payback criterion?

--Calculate the internal rate of return (IRR) for each project.

--Which projects would you accept based on the IRR criterion?

--Calculate the net present value (NPV) for each project.

--Which projects would you accept based on the NPV criterion?

2. Assume the projects are mutually exclusive and answer the following:

--Which project(s) would you accept based on the payback criterion?

--Which projects would you accept based on the IRR criterion?

--Which projects would you accept based on the NPV criterion?

- 6 days ago
- 6

**Answer(0)**