Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects for AZ$-$Motorcars. Assume the discount rate for both projects is $10$ percent.

Year

AZM Mini$-$SUV

AZF Full$-$SUV

$1$

$2$

$3$

$-$$$675,000$

$403,000$

$274,000$

$238,000$

$-$$$930,000$

$415,000$

$467,000$

$319,000$

a$.$ Based on the payback period, which project should be accepted?

b$.$ Based on the NPV$,$ which project should be accepted?

c$.$ Based on the IRR, which project should be accepted?Managerial Finance

Questions and Problems $($CH $5)$

Comparing Investment Criteria Consider the following cash flows of two mutually exclu$-$

sive projects for AZ$-$Motorcars. Assume the discount rate for both projects is $10$ percent.

a$.$ Based on the payback period, which project should be accepted?

b$.$ Based on the NPV$,$ which project should be accepted?

c$.$ Based on the IRR, which project should be accepted?