Britney Javelin Company is considering two investments, both of which cost $47,000. The cash flows are as follows: Use Appendix Band Appendix D.

Year Project M Project N 1 $25,000 $21,000 2 20,000 23,000 3 18,000 25,000

a. Calculate the payback period for project M and project N. (Round the final answers to 2 decimal places.)

Payback period Project M years Project N years

b-1.Calculate the NPV for project M and project N. Assume a cost of capital of 8 percent. (Round "PV Factor" to 3 decimal places. Round the intermediate and final answers to the nearest whole dollar.)

Net present value Project M $ Project N $

b-2.Which of the two projects should be chosen based on the NPV method?

• Project M
• Project N
• Both

c.Should a firm normally have more confidence in answer derived based on NPV method or Payback method?

• NPV method
• Pay back method