Answer:
Year           Dry Prepreg          discounted cash flow
0                   -$30,000                -$30,000
1                        10,000                    8,772
2                       10,000                    7,695
3                       10,000                    6,750
4                       10,000                    5,921
5                       10,000                    5,194
Year           Solvent Prepreg.           discounted cash flow
0                         -$90,000                   -$90,000
1                            28,000                       24,561
2                           28,000                       21,545
3                           28,000                       18,899
4                           28,000                       16,578
5                           28,000                      14,542
a. Calculate NPV, IRR, MIRR, payback, and discounted payback for each project
Dry Prepreg
NPV = $4,330
IRR = 19.86%
MIRR = 17.12%
payback = 3 years
discounted payback = 4.17 years
Solvent Prepreg
NPV = $6,130
IRR = 16.80%
MIRR = 15.51%
payback = 3.21 years
discounted payback = 4.58 years
b. Assuming the projects are independent, which one(s) would you recommend?
- both projects, since their NPV is positive
c. If the projects are mutually exclusive, which would you recommend?
Dry prepreg becuase its IRR, MIRR are higher, and its payback and discounted payback periods are shorter.