1. Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for Spartan Rubber Company is 11 percent.

Year Dry Prepreg Solvent Prepreg

0 –$ 1,790,000 –$ 795,000

1 1,109,000 420,000

2 918,000 690,000

3 759,000 408,000

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a. What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Payback period

Dry Prepreg years

Solvent Prepreg years

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b. What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

NPV

Dry Prepreg $

Solvent Prepreg $

________________________________________

c. What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

IRR

Dry Prepreg %

Solvent Prepreg %

________________________________________

d. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Incremental IRR %

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