Project Year Project A 13,500 8,900 8,100 6,700 2,100 3,600 3,100 5,500 Calculat
ID: 2410717 • Letter: P
Question
Project Year Project A 13,500 8,900 8,100 6,700 2,100 3,600 3,100 5,500 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 Proiect A Proiect B 1.81 years 24 yearis Based on the payback period, which project should the company accept? Project B Project A If the appropriate discount rate is 14 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 Proiect A Proiect BExplanation / Answer
NPV:- PV of cash inflow - Cash Outflow(Initial investment)
Project A
Amount
PV factor
Present Value
Cash Inflows :-
Year 1
8100
0.87719
7105.239
Year 2
6700
0.76947
5155.449
Year 3
2100
0.67497
1417.437
Net PV of Cash Inflow (A)
13678.125
Cash Outflow (B)
13500
NPV (A –B)
178.125
Project B
Amount
PV factor
Present Value
Cash Inflows :-
Year 1
3600
0.87719
3157.884
Year 2
3100
0.76947
2385.357
Year 3
5500
0.67497
3712.335
Net PV of Cash Inflow (A)
9255.576
Cash Outflow (B)
8900
NPV (A –B)
355.576
Project B is need to be accepted
Project A
Amount
PV factor
Present Value
Cash Inflows :-
Year 1
8100
0.87719
7105.239
Year 2
6700
0.76947
5155.449
Year 3
2100
0.67497
1417.437
Net PV of Cash Inflow (A)
13678.125
Cash Outflow (B)
13500
NPV (A –B)
178.125
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