Calculating Payback Period and NPV Novell, Inc., has the following mutually exclusive projects. Year Project A Project B 0 -$15,000 -$19,000 1 10,400 12,700 2 5,900 6, 100 3 2,100 5, 300 Suppose the company’s payback period cutoff is two years. Which of these two projects should be chosen? Suppose the company uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent?
- Calculating Payback Period and NPV Novell, Inc., has the following mutually exclusive projects.
Year Project A Project B
0 -$15,000 -$19,000
1 10,400 12,700
2 5,900 6, 100
3 2,100 5, 300
- Suppose the company’s payback period cutoff is two years. Which of these two projects should be chosen?
- Suppose the company uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent?
1)
The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the expense or initial investment of a venture, or to what extent it takes. Record and reserve chiefs utilize the restitution time frame to choose if speculation is to experience. Shorter paybacks mean increasingly appealing speculations while there is a less attractive quality for longer restitution periods. The payback period is dividing the amount of the investment by the annual cash flow.
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 4 images
