Calculating Payback Period and NPV Fuji Software, Inc., has the following mutually exclusive projects.

Year Project A Project B 0 $7,500 $5,000 1 4,000 2,500 2 3,500 1,200 3 1,500 3,000

a. Suppose Fuji’s payback period cutoff is two years. Which of these two projects should be chosen?

b. Suppose Fuji uses the NPV rule to rank these two projects. Which project should be chosen if the appropriate discount rate is 15 percent? LO.1