Choosing between two projects with acceptable payback periodsShell Camping Gear, Inc., is considering two mutually exclusive projects. Each requires an initial investment of

$140,000.John Shell, president of the company, has set a maximum payback period of 4 years. The after-tax cash inflows associated with each project are shown in the following table:

a.Determine the payback period of each project.

b.Because they are mutually exclusive, Shell must choose one. Which should the company invest in?

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Part 1 a.The payback period of project A is enter your response here years.(Round to two decimal places.)

Part 2 The payback period of project B is enter your response here years.(Round to two decimal places.)

Part 3 b.Because they are mutually exclusive, Shell must choose one. Using the payback period, which project should the company invest in?(Select the best answer below.)

Project A would be preferred over project B because the larger cash flows are in the later years of the project.

Project B would be preferred over project A because the larger cash flows are in the early years of the project.

(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)

		Cash inflows (CFt)
Year		Project A		Project B
1		$20,000		$50,000
2		$30,000		$40,000
3		$40,000		$30,000
4		$50,000		$20,000
5		$40,000		$40,000

Internal rate of returnFor the project shown in the following table,, calculate the internal rate of return

(IRR). Then indicate, for the project, the maximum cost of capital that the firm could have and still find the IRR acceptable.

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Part 1

The project's IRR is enter your response here%. (Round to two decimal places.)

Part 2 The maximum cost of capital that the firm could have and still find the IRR acceptable is enter your response here%. (Round to two decimal places.)

Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)

Initial investment (CF0)	$70,000
Year (t)	Cash inflows (CFt)
1	$15,000
2	$30,000
3	$15,000
4	$20,000
5	$10,000

NPV and IRRBenson Designs has prepared the following estimates for a long-term project it is considering. The initial investment is

$29,660, and the project is expected to yield after-tax cash inflows of $5,000 per year for 9 years. The firm has a cost of capital of

15%.

a.Determine the net present value (NPV) for the project.

b.Determine the internal rate of return (IRR) for the project.

c.Would you recommend that the firm accept or reject the project?

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Part 1

a.The NPV of the project is $enter your response here. (Round to the nearest cent.)

Part 2

b. The IRR of the project is enter your response here%. (Round to two decimal places.)

Part 3

c.Would you recommend that the firm accept the project?(Select the best answer below.)

yes or no?