question archive A forester must evaluate two projects
A forester must evaluate two projects
Subject:FinancePrice: Bought3
A forester must evaluate two projects. The costs and benefits associated with each project, and the years in which they will occur, are given in the following table.
Year project D Project N
0 -$1,500 -$1,000
12 $0 +$3,500
25 +$8,000 $0
a. Assuming an interest rate of 4 percent, calculate the Net Present Value (NPV) and Benefit-Cost ratio for each project. Show your work.
b. Compare the two projects using the payback criterion. Analyze the projects' ranking based on this criterion.
c. Compare the two projects using the IRR criterion. Analyze the projects' ranking based on this criterion.
d. Discuss which project(s) should the forester undertake if
i. The projects are independent? Explain why and what criteria you can use.
ii. the projects are mutually exclusive? Explain why and what criteria you can use.
