What is the payback period for each project? (Do not round intermediate calculat

Question

What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What is the discounted payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

Explanation / Answer

Year Cash Flow Discount Rate Net Cash Flow Cumulative Cash Flow 0 -359000 -359000 1 -359000 -359000 1 36000 -323000 0.877193 31578.95 -327421 2 56000 -267000 0.769468 43090.18 -284331 3 56000 -211000 0.674972 37798.4 -246532 4 431000 220000 0.59208 255186.6 8654.133 NPV 8654.133 Year Cash Flow Discount Rate Net Cash Flow Cumulative Cash Flow 0 -45500 -45500 1 -45500 -45500 1 23100 -22400 0.877193 20263.16 -25236.8 2 21100 -1300 0.769468 16235.76 -9001.08 3 18600 17300 0.674972 12554.47 3553.393 4 13700 31000 0.59208 8111.5 11664.89 NPV 11664.89 0.966084 I will choose project B due to higher Net Present Value Payback Period Discounted Payback Period Project A 3+211000/431000 Project a 3+246532/255187 3+.489 3+.96 3.49 Years 3.96 Years r 0.069892 0.716983 Project B 2+1300/18600 2+9001/12554 2+.06 2+.71 2.06 Years 2.71 Years On the basis of discounted payback period I will choose Project A due to lower payback period On the basis of NPV I will choose project B

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