Fuji Software, Inc., has the following mutually exclusive projects. Calculate th
ID: 2622591 • Letter: F
Question
Fuji Software, Inc., has the following mutually exclusive projects.
Calculate the payback period for each project. (Round your answers to 3 decimal places. (e.g., 32.161))
Which, if either, of these projects should be chosen?
What is the NPV for each project if the appropriate discount rate is 17 percent? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))
Which, if either, of these projects should be chosen if the appropriate discount rate is 17 percent?
Fuji Software, Inc., has the following mutually exclusive projects.
Explanation / Answer
Project A
Payback period = 1+(25000-14500)/11000 = 1.95 years
Project B
Payback period = 2+(28000-15500-12000)/11000 = 2.04 years
Project A should be chosen as it has less Payback period
NPV of project A = -25000+(14500/1.17)+(11000/1.17^2)+(3400/1.17^3) = -$2448.32
NPV of project B = -28000+(15500/1.17)+(12000/1.17^2)+(11000/1.17^3) = $882.10
Project B should be chosen
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.