Question 1 20 pts ABC company is considering investing in Project Zeta. This pro

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Question 1 20 pts ABC company is considering investing in Project Zeta. This project generates the following cash flows: year "zero"-300 dollars (outflow); year 1-165 dollars (inflow); year 2-309 dollars (inflow); year 3 = 129 dollars (inflow); year 4-178 dollars (inflow). The MARR is 9 %. Find the simple payback period (measured in years). Note: round your answer to two decimal places, and do not include spaces, currency signs, plus or minus signs, nor commas. Question 2 20 pts ABC company is considering investing in Project Zeta or Project Omega. Project Zeta generates the following cash flows: year "zero"-394 dollars (outflow); year 1-178 dollars (inflow): year 2 = 265 dollars (inflow); year 3- 359 dollars (inflow); year 4 181 dollars (inflow). Project Omega generates the following cash flows: year "zero" 230 dollars (outflow); year 1 120 dollars (inflow); year 2 100 dollars (inflow); year 3-200 dollars (inflow); year 4-120 dollars (inflow). The MARR is 10 %. Using the Present Worth Method, calculate the Net Present Value of the BEST project. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)

Explanation / Answer

Answer 1.

Cash flow Year 0 = -$300
Cash flow Year 1 = $165
Cash flow Year 2 = $309
Cash flow Year 3 = $129
Cash flow Year 4 = $178

Initial Cost is $300 out of which $165 is recovered in Year 1 and remaining $135 will be recovered in Year 2.

Payback Period = 1 + $135/$309
Payback Period = 1.44 years

So, Simple Payback Period is 1.44 years

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