Materials, Inc., is considering two mutually exclusive?
Materials, Inc., is considering two mutually exclusive? projects, each with an initial investment of ?$140,000. The? company's board of directors has set a? 4-year payback requirement and has set its cost of capital at 7%. The cash inflows associated with the two projects are shown in the following? table: Cash inflows ?(CFt?) Year Project A Project B 1 ?$40,000 $75,000 2 $40,000 ?$70,000 3 $40,000 $20,000 4 ?$40,000 ?$20,000 5 ? $40,000 ?$20,000 6 ?$40,000 ?$20,000
a. Calculate the payback period for each project. Rank the projects by payback period.
b. Calculate the NPV of each project. Rank the project by NPV.Â
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Posted 31 May 2017 08:05 AM
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