Alibaba company is choosing between two projects. Table 4 shows Project A and Project B cash flows, if time value of money is taken into consideration with an interest rate of 10% for both projects, what would be the discounted payback period for both projects? Which project should Alibaba company choose and why? Table 4: Project A and Project B Cash Flows Project B Year Project A -1,000 -1,000 200 200 2 400 300 3 600 800 100 1,000 4)

Alibaba company is choosing between two projects. Table 4 shows Project A and Project B cash flows, if time value of money is taken into consideration with an interest rate of 10% for both projects, what would be the discounted payback period for both projects? Which project should Alibaba company choose and why? Table 4: Project A and Project B Cash Flows Project B Year Project A -1,000 -1,000 200 200 2 400 300 3 600 800 100 1,000 4)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Alibaba company is choosing between two projects. Table 4 shows Project A and
Project B cash flows, if time value of money is taken into consideration with an interest
rate of 10% for both projects, what would be the discounted payback period for both
projects? Which project should Alibaba company choose and why?
Table 4: Project A and Project B Cash Flows
Project B
Year
Project A
-1,000
-1,000
200
200
2
400
300
3
600
800
100
1,000
4)

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The following are the cash flows of two projects: Year Project A Project B -$200 -$200 01234 Project A B If the opportunity cost of capital is 11%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Profitability index 80 80 80 80 00 100 100 100 Is the project with the highest profitability index also the one with the highest NPV? Yes No
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