Grant, Incorporated, has the following mutually exclusive projects Year Project A Project B 0 -$ 14,900 -$ 10,200 1 9,400 4,900 8,000 4,400 6,800 2 3 2,100 a. Calculate the payback period for each project. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Based on the payback period, which project should the company accept? c. If the appropriate discount rate is 13 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. d. Based on the NPV, which project should the company accept?
Grant, Incorporated, has the following mutually exclusive projects Year Project A Project B 0 -$ 14,900 -$ 10,200 1 9,400 4,900 8,000 4,400 6,800 2 3 2,100 a. Calculate the payback period for each project. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. Based on the payback period, which project should the company accept? c. If the appropriate discount rate is 13 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. d. Based on the NPV, which project 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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Transcribed Image Text:Grant, Incorporated, has the following mutually exclusive projects
Year
Project A
Project B
0
-$ 14,900
-$ 10,200
1
9,400
4,900
2
3
8,000
4,400
6,800
2,100
a. Calculate the payback period for each project.
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. Based on the payback period, which project should the company accept?
c. If the appropriate discount rate is 13 percent, what is the NPV for each project?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
d. Based on the NPV, which project should the company accept?
a. Project A
years
Project B
years
b. Payback decision
c. Project A
Project B
d. NPV decision
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