Question

ri Star, Inc., has the following mutually exclusive projects:

Year	Project A				Project B
0	–$	13,300			–$	8,700
1		7,500				3,400
2		6,500				2,900
3		2,100				5,300

Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Payback Period
Project A	years
Project B	years

Based on the payback period, which project should the company accept?

• Project A

• Project B

If the appropriate discount rate is 12 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Project A	$
Project B	$

Based on the NPV, which project should the company accept?

• Project B

• Project A

Answer 1