Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0
-$ 262,000
-$ 37,400
1
34,000
18,000
2
50,000
16,000
3
50,000
16,000
4
329,000
12,000
Whichever project you choose, if any, you require a return of 11 percent on your investment.
a-1. What is the payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
Payback period
Project A
Project B
Years
Years
a-2. If you apply the payback criterion, which investment will you choose?
O Project A
O Project B
b-1. What is the discounted payback period for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
Discounted payback period
Project A
Project B
Years
Years
b-2. If you apply the discounted payback criterion, which investment will you choose?
O Project A
O Project B
c-1. What is the NPV for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
MPV
Project A
Project B