In: Finance
Your firm is subject to capital rationing and can only invest $60,000. You've estimated the following cash flows (in $) for two projects: just need answers don't need formula and steps
Year | Project A | Project B |
0 | -55,000 | -55,000 |
1 | 10,000 | 30,000 |
2 | 20,000 | 20,000 |
3 | 30,000 | 10,000 |
4 | 40,000 | 0 |
The required return for both projects is 8%.
A:What is the payback period for project A? 2 Decimals
B:What is the payback period for project B? 2 decimals
C:Which project seems better according to the payback method?
Project B
Project A
D:What is the NPV for project A?
G:What is the NPV for project B?
E:Which project seems better according to the NPV method?
Project A
Project B
F:Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept?
Project B
Project A