Year 0 1 2 3 Project A -$50,000 $24,200 $16,800 $46,500 Project B -$45,000 $39,000 $18,000 $18,000 Assume these projects are mutually exclusive and the cost of capital is 12.6%. Which of the following statements are true? OA. The payback period of project A is 2.19 years. B. You'll accept project A since its NPV is about $872.85 greater than that of project B. OC. You'll accept project B since its payback period is shorter than project A. OD. Both (A) and (B) are true. O E. Both (A) and (C) are true.
Year 0 1 2 3 Project A -$50,000 $24,200 $16,800 $46,500 Project B -$45,000 $39,000 $18,000 $18,000 Assume these projects are mutually exclusive and the cost of capital is 12.6%. Which of the following statements are true? OA. The payback period of project A is 2.19 years. B. You'll accept project A since its NPV is about $872.85 greater than that of project B. OC. You'll accept project B since its payback period is shorter than project A. OD. Both (A) and (B) are true. O E. Both (A) and (C) are true.
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:Year
0
2
Project A
-$50,000
$24,200
$16,800
$46,500
Project B
-$45,000
$39,000
$18,000
$18,000
Assume these projects are mutually exclusive and the cost of capital is 12.6%. Which of the following statements are
true?
A. The payback period of project A is 2.19 years.
B. You'll accept project A since its NPV is about $872.85 greater than that of project B.
C. You'll accept project B since its payback period is shorter than project A.
D. Both (A) and (B) are true.
E. Both (A) and (C) are true.
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