Diaz Camera Company is considering two investments, both of which cost $16,000.
ID: 2660294 • Letter: D
Question
Diaz Camera Company is considering two investments, both of which cost $16,000. The cash flows are as follows:
Calculate the payback period for project A and project B. (Round your answers to 2 decimal places.)
Calculate the net present value for project A and project B. Assume a cost of capital of 9 percent. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Which of the two projects should be chosen based on the net present value method?
Diaz Camera Company is considering two investments, both of which cost $16,000. The cash flows are as follows:
Use Appendix B. Diaz Camera Company is considering two investments, both of which cost $16,000. The cash flows are as follows: Calculate the payback period for project A and project B. (Round your answers to 2 decimal places.) Which of the two projects should be chosen based on the payback method? Calculate the net present value for project A and project B. Assume a cost of capital of 9 percent. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.) Which of the two projects should be chosen based on the net present value method? Should a firm normally have more confidence in answer derived based on Net present value method or Payback method?
Explanation / Answer
Diaz Camera Company is considering two investments, both of which cost $16,000. The cash flows are as follows:
Calculate the payback period for project A and project B. (Round your answers to 2 decimal places.)
Project A = 2+ 2000/6000 = 2.33 Year
Project B = 2 + 5000/11000 = 2.45 Year
Calculate the net present value for project A and project B. Assume a cost of capital of 9 percent. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Which of the two projects should be chosen based on the net present value method?
Diaz Camera Company is considering two investments, both of which cost $16,000. The cash flows are as follows:
Use Appendix B.Related Questions
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