Andouille Spices, Incorporated, has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent. Year 0 1 2 5 a. Project F Project G b. Project F Project G Project F -$ 135,000 60,000 50,000 C. 60,000 55,000 50,000 Project G -$ 205,000 40,000 55,000 90,000 a. Calculate the payback period for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Calculate the NPV for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. Which project, if any, should the company accept? 120,000 135,000 years years

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
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Andouille Spices, Incorporated, has the following mutually exclusive projects available. The company has historically used a three-year
cutoff for projects. The required return is 10 percent.
Year
0
1
2
3
4
5
a. Project F
Project G
b. Project F
Project G
C.
Project F
-$ 135,000
60,000
50,000
60,000
55,000
50,000
Project G
-$ 205,000
40,000
a. Calculate the payback period for both projects.
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. Calculate the NPV for both projects.
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
c. Which project, if any, should the company accept?
55,000
90,000
120,000
135,000
years
years.
Transcribed Image Text:Andouille Spices, Incorporated, has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent. Year 0 1 2 3 4 5 a. Project F Project G b. Project F Project G C. Project F -$ 135,000 60,000 50,000 60,000 55,000 50,000 Project G -$ 205,000 40,000 a. Calculate the payback period for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Calculate the NPV for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. Which project, if any, should the company accept? 55,000 90,000 120,000 135,000 years years.
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