Solve the problem below. Two project proposals have been presented to XYZ Corporation. Project A requires an initial investment of Php 80,000.00 and the expected annual cash return is Php 30,000.00 for 4 years. Project B requires an initial investment of Php 60,000.00 and the expected annual cash return is Php 20,000.00 for 5 years. a. What is the payback period of each project? b. Compute for the net present value of each project if the cost of capital is 10%. c. Which project should XYZ Corporation accept? Why?

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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Solve the problem below.
Two project proposals have been presented to XYZ Corporation.
Project A requires an initial investment of Php 80,000.00 and the expected
annual cash return is Php 30,000.00 for 4 years. Project B requires an
initial investment of Php 60,000.00 and the expected annual cash return is
Php 20,000.00 for 5 years.
a. What is the payback period of each project?
b. Compute for the net present value of each project if the
cost of capital is 10%.
c. Which project should XYZ Corporation accept? Why?
Transcribed Image Text:Solve the problem below. Two project proposals have been presented to XYZ Corporation. Project A requires an initial investment of Php 80,000.00 and the expected annual cash return is Php 30,000.00 for 4 years. Project B requires an initial investment of Php 60,000.00 and the expected annual cash return is Php 20,000.00 for 5 years. a. What is the payback period of each project? b. Compute for the net present value of each project if the cost of capital is 10%. c. Which project should XYZ Corporation accept? Why?
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