Comparing payback period and discounted payback period.

Nielsen, Inc. is switching from the payback period to the discounted payback period for small-dollar projects. The cutoff period will remain at three years. Given the following four projects' cash flows and using a discount rate of 10%, determine which projects it would have accepted under the payback period and which it will now reject under the discounted payback period.

Cash Flow	Project 1		Project 2		Project 3		Project 4
Initial Cost	$10,000		$15,000		$8,000		$18,000
Year 1	$4,000		$7,000		$3,000		$10,000
Year 2	$4,000		$5,500		$3,500		$11,000
Year 3	$4,000		$4,000		$4,000		$ 0

Which projects that would have been accepted under payback period method will now be rejected under the discounted payback period method?(Select the best response.)

A.Project 2, project 4

B.

Project 1, project 3

C.

Project 1, project 2

D.None of them

Net present

value.

Quark Industries has a project with the following projected cash flows:

Initial cost: $230,000 Cash flow year one: $25,000 Cash flow year two: $79,000 Cash flow year three: $142,000 Cash flow year four: $142,000

a. Using a discount rate of

11%

for this project and the NPV model, determine whether the company should accept or reject this project.

b. Should the company accept or reject it using a discount rate of

14%?

c. Should the company accept or reject it using a discount rate of

19%?

a. Using a discount rate of

11%,

this project should be

Accepted or

rejected

.

(Select from the drop-down menu.)