Capital Budgeting Tools: Payback and NPV

NJF Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $87,900, and the company uses a 13 percent discount rate. The cash inflows for each investment follow:

Year	A	B	C	D
1	$10,000	$50,000	$25,000	$ 0
2	20,000	40,000	25,000	0
3	30,000	30,000	25,000	0
4	40,000	0	25,000	55,000
5	50,000	0	5,000	60,000

Evaluate each investment alternative by answering the following questions and performing the requested calculations. You must show all your work including formulas used and values used. (Those using financial calculators need to show either the formula or calculator keys and values used.)

Please organize your responses as per each question part - a.i., a.ii, ...b.i., b.ii,...,c (total of 9 responses to this question).

1. Payback
   1. Calculate the Payback Period (in years, to 2 decimal places) for each investment.
   2. Which investment(s) could be chosen if the company had a payback threshold of 4.00 years?
   3. Which is the best investment choice based on Payback Period (choose one investment only)?
   4. Why did you choose the investment in part a) iii above?
2. Net Present Value
   1. Calculate the Net Present Value (in whole numbers) for each investment.
   2. Based on the NPV rule, which investments could you choose?
   3. Which is the best investment choice based on NPV (choose one investment only)?
   4. Why did you choose the investment in part b) iii above?
3. With only the calculations for Payback Period and NPV above, which ONE investment would you recommend for NJF Enterprises and why? PLEASE CORRECT ANSWER ONLY AND TYPE IT SO I CAN COPY TIME IS SHORT , THANK YOU