The following information will be used to answer questions 8, 9, and 10. Your company can invest in 1 of the following projects: Cash Flows Year Project A Project B 0 -70.000 -65.000 1 30.000 8.000 2 10.000 8.000 3 10.000 8,000 4 18.000 9.000 O 5.000 30.000 6 4.000 40.000 The interest rate is 8%. 8a. What is the payback period for each project? 8b. If you base your decision on which project has the shortest payback, which will you choose?
The following information will be used to answer questions 8, 9, and 10. Your company can invest in 1 of the following projects: Cash Flows Year Project A Project B 0 -70.000 -65.000 1 30.000 8.000 2 10.000 8.000 3 10.000 8,000 4 18.000 9.000 O 5.000 30.000 6 4.000 40.000 The interest rate is 8%. 8a. What is the payback period for each project? 8b. If you base your decision on which project has the shortest payback, which will you choose?
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

Transcribed Image Text:The following information will be used to answer questions 8, 9, and 10.
Your company can invest in 1 of the following projects:
Cash Flows
Year
Project A
Project B
0
-70.000
-65.000
1
30.000
8.000
2
10.000
8.000
3
10.000
8,000
4
18.000
9.000
O
5.000
30.000
6
4.000
40.000
The interest rate is 8%.
8a. What is the payback period for each project?
8b. If you base your decision on which project has the shortest payback, which will you choose?
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