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 11 percent. Year Project F Project G 0 −$ 144,000 −$ 214,000 1 55,500 35,500 2 54,500 50,500 3 64,500 94,500 4 59,500 124,500 5 54,500 139,500 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. Calculate the NPV for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Which project, if any, should the company accept?
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 11 percent. Year Project F Project G 0 −$ 144,000 −$ 214,000 1 55,500 35,500 2 54,500 50,500 3 64,500 94,500 4 59,500 124,500 5 54,500 139,500 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. Calculate the NPV for both projects. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Which project, if any, should the company accept?
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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Question
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 11 percent.
| Year | Project F | Project G |
|---|---|---|
| 0 | −$ 144,000 | −$ 214,000 |
| 1 | 55,500 | 35,500 |
| 2 | 54,500 | 50,500 |
| 3 | 64,500 | 94,500 |
| 4 | 59,500 | 124,500 |
| 5 | 54,500 | 139,500 |
-
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.
-
Calculate the NPV for both projects.
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
-
Which project, if any, should the company accept?
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