(Solution) - Nassim Roofing Materials Inc is considering two mutually exclusive projects -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Nassim Roofing Materials, Inc., is considering two mutually exclusive projects, each with an initial investment of US$150,000. The company's board of directors has set a maximum 4-year payback requirement and has set its cost of capital at 9 percent. The cash inflows associated with the two projects are shown in the table below.
a. Calculate the payback period for each project.
b. Calculate the NPV of each project at 0 percent.
c. Calculate the NPV of each project at 9 percent.
d. Derive the IRR of each project.
e. Rank the projects by each of the techniques used. Make and justify a recommendation.