8.3. Which Project should be accepted A or B?

a. The payback for Project A is: Payback =

b. The payback for Project B is: Payback =

c. Which project should be accepted:

8.4. Calculating AAR, the average net income divided by the average book value. (Show work by calculating net income and average book value):

a. Average net income =

b. Average book value =

c. AAR =

8.5. Calculating IRR the interest rate that makes the NPV of the project equal to zero. (Show work by calculating IRR):

a. IRR =

b. Should the project be accepted and why?

8.6. Calculating NPV. Hint the NPV of a project is the PV of the outflows minus by the PV of the inflows. (Show work by calculating NPV):

a. @ 9% required return.

NPV@ 9% required return =

b. Should the project be accepted:

c. @ 21% required return.

NPV@ 21% required return =

d. Should the project be accepted: